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Google Profits Top Estimates

CEO Larry Page hints at future products and defends his company's long-shot bets.

Google Nexus 7, Take Two: What To Expect
Google Nexus 7, Take Two: What To Expect
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Google reported $13.97 billion in revenue and $11.58 non-GAAP earnings per share for the first quarter of 2013 on Thursday, beating profit estimates but not revenue estimates.

Financial analysts on average estimated Google would report $14.04 billion in revenue and $10.69 earnings per share.

Google CEO Larry Page in a statement characterized the results as "a very strong start to 2013."

Paid clicks -- the amount advertisers pay Google -- increased 20% compared to the first quarter of 2012 and 3% compared to the fourth quarter of 2012. The company's average cost-per-click -- the amount advertisers pay Google per ad click -- declined 4% compared to Q1 2012 and 4% compared to Q4 2012.

[ Google is hoping its high-tech venture Project Glass will inspire a slew of complementary products and services. Read Google Project Glass Gets Venture Funding. ]

According to eMarketer, Google's market share in U.S. online search, display advertising and mobile advertising is greater than any other company's. The market research firm expects Google's digital ad revenue to account for more than 41% of all digital ad revenue in the U.S. in 2013, up from 40.3% in 2012. Google is even more dominant in mobile search, where it captured 93% of U.S. net mobile search ad dollars in 2012.

One area where Google isn't leading is in mobile display advertising. There Google is a close second to Facebook. eMarketer predicts Facebook will collect 28.6% of U.S. mobile display ad revenue this year, up from 21.1% in 2012, while Google will earn 19.6%, up from 17% in 2012.

During Google's investor conference call, Page hinted at the kinds of hardware innovation company engineers might be investigating by noting potential opportunities for innovation. He said that mobile devices should not need a charger, should not break when dropped and should not die when spilled on.

Page, whose voice sounded less hoarse than it had in previous calls, stressed that voice interaction represented the future of Google Search. "Voice commands are going to be increasingly important," he said. "It's just much less hassle to talk than to type."

The assumption here is that mobile devices rather than desktop devices are what matter.

Page also defended his company's investment in ambitious projects such as self-driving cars and Google Glass, projects that he has previously characterized as "moonshots." "Incremental improvement is guaranteed to be obsolete over time," he said.

Expressing enthusiasm for Google Glass, Page noted that the first Glass units have begun shipping to developers. "I get chills when I use a product that is the future," he said. "And that happens when I use Glass."

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