SAN FRANCISCO (AP) — Google's earnings are still rising at an impressive clip even as a long-running slump in its ad prices deepens and management gambles on risky ventures such as its unprofitable purchase of smartphone maker Motorola Mobility.
The latest evidence of the company's moneymaking prowess emerged Thursday with the release of results covering the holiday shopping season and the advertising blitz it produces. Investors evidently liked what they saw because they drove up Google's stock by 4 percent in extended trading to position the shares to reach a new peak Friday.
Although the company's earnings rose 17 percent during the fourth quarter, there were further signs of deterioration in Google's ad prices despite efforts to close the gap between rates for mobile devices and for traditional computers.
Google's average ad price during the fourth quarter fell 11 percent from the previous year. That was the steepest quarterly drop in 2013. It marked the ninth consecutive quarter that Google's average ad rate, also known as "cost per click," has fallen from the previous year.
Online advertisers haven't been willing to pay as much to reach prospective customers on the smaller screens of smartphones and tablets.
However, Google has been tweaking its digital marketing system so mobile and PC ad campaigns are bundled together. In doing so, Google Inc. is hoping advertisers eventually will recognize the advantages of reaching people on the go and gradually begin to pay higher prices for mobile marketing pitches.
Mobile devices now generate nearly one-fourth of Google's total ad revenue, up from a small fraction just two years ago, based on estimates from the research firm eMarketer.