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) -- If there's a stark difference between companies that play in the mobile arena, it's that hardware pays, and advertising doesn't. At least not yet.

Even though



Thursday's earnings release snafu was caused by printer

R.R. Donnelly


, Google has bigger fish to fry than that -- how to tackle the mobile game.

Third quarter earnings

from Google were worse than expected, as cost-per-click (CPC), a key metric for Google, fell sharply year over year and quarter over quarter, highlighting the fact mobile ads are still not as profitable as desktop ads.

Wall Street analysts were expecting CPC to bottom out this quarter. That hasn't happened. Google said CPC fell 15% year over year, and 3% quarter over quarter.

As a result, third-quarter earnings, excluding


, came in at $9.03 a share on $11.33 billion in revenue. Analysts polled by

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were looking for Google to earn $10.65 a share on $11.862 billion in revenue for the third quarter.

Google Earnings Leak: Blog Recap

On the conference call Thursday, CEO Larry Page said mobile revenue had an annual run rate of $8 billion, including Google Play. "That's some business," Page said. Even though mobile revenue has ramped up from $2.5 billion to $8 billion on an annual basis, it's still not enough, as the world is going increasingly mobile.

Bank of America Merrill Lynch analyst Justin Post downgraded Google to neutral with a $745 price target, not only on concerns over mobile monetization, but PC revenue deceleration as well.

"We are moving to the cautious camp and downgradingGoogle to Neutral from Buy (we've been a Buy since 2006) as we think the mobiletransition is accelerating, and more difficult quarters are likely in 2013," Post wrote in his note.

Oppenheimer analyst Jason Helfstein also downgraded Google shares. He lowered his rating to perform with a $695 price target on concerns over Nexus advertising spending, and Motorola concerns.

Mobile monetization has been extremely difficult for companies that rely mostly on ad revenue, such as






, while companies that sell hardware are doing well, with





the two primary examples.

Google is starting to get into the hardware with the Nexus 7, but that only accounted for about $200 million in "other revenue" during the last quarter. The company didn't break out specific results, only saying that they were pleased with the results, and ramped up marketing to support the tablet.

Google has a long way to go in figuring out how to monetize mobile ads, to the extent it did desktop. JPMorgan analyst Doug Anmuth believes the mobile search transition may be less lucrative for Google in the short term. Google is still poised for growth, as it continues to build out its ecosystem of hardware, content, and apps in its fight against Apple for domination.

It just may have to do so knowing that its core business -- advertising -- is going to be under pressure for quite some time.

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Written by Chris Ciaccia in New York

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