For the period ending December, the search giant beat Street estimates as net income jumped 6.6% year over year to $2.89 billion, or $8.62 per share. Consolidate revenue surged 36% from last year to $14.42 billion, beating analysts' estimates of $12.34 billion. However, despite the strong revenue performance, Google reported a 6% drop in cost-per-click over the fourth quarter a year ago. This is the metric that tracks how much companies pay to Google for ads. That it advanced 2% from the third quarter was encouraging, but this was the fifth consecutive quarterly drop. The concern is Facebook (FB) is beginning to eat away at Google's advertising dominance, particularly with mobile. What's more, Facebook posted 32% year-over-year growth in ad revenue, proving its move towards sponsored stories has also been effective, helping the company gain more overall footing with advertisers. Then again, these types of competitive threats continue to be the reason why Google's expenses are always high each quarter. The fourth quarter was no different. Operating expenses climbed to $4.81 billion, or 33% of revenue, one point higher from the previous year. It's time for the Street to accept that this is how Google operates.
Despite its search dominance, Google has pushed into smartphones, tablets and, most recently, ISP projects. The company can't remain a tech power and still fight off Apple (AAPL) and Microsoft (MSFT) without spending. In many respects, its spending have been justified.