Results for the fourth quarter of 2014 came out a few weeks ago and Google Inc. (NASDAQ:GOOGL) reported figures that were below analyst expectation. Although the company grew its revenue, still the growth was not as much as anticipated. However, some experts now suggest that this slower growth may not be in Google’s control, and the company would’ve exceeded market analyst expectations had there not existed certain external factors.
The biggest external factor to affect Google’s revenue growth is the rising value of the dollar in the external market. The US dollar has been strengthening for the past 6 months now, but has picked up the pace in the fourth quarter of 2014. As Google generates most of its revenue from international markets (over 56%), the rising value of the dollar against currencies of other countries has seriously taken a toll on the dollar value of the revenue received by the company. Even though revenues have increased as expected in international markets, after conversion into the US dollar, the growth has not been as much as expected.
However, external factors are not the only ones dictating revenue growth figures for the company.
Google has been facing toughening competition from competitors in the international market, especially by Apple Inc. The iPhone received soaring demand in the fourth quarter of 2014, contributing heavily to the revenue growth of Apple Inc., Google’s biggest competitor, which recorded sky-high revenue figures of $18 billion in the quarter, above Google.
Some analysts have professed Google’s slower-than-expected revenue growth can be credited to the falling demand for its products. Truly, demand for the Nexus phones and other Google products in the tech market is not as much as Apple’s.
However, most analysts have reassured investors that slower growth in revenue figures is not because of growing demand for Apple Inc. products. Google is still the dominant market player in the advertisement business, which increased 18% in the fourth quarter of 2014, and this alone brings most of the revenue the company (and investors) rely on, according to experts.
Also, the company became more expensive than usual in the fourth quarter of 2014, as operating expenses being incurred by the company become 24% of its total revenue figures. However, operating expenses grew by a bigger percentage than the revenue, hence that has become a point of concern for Google investors.
Expected revenue growth by analysts estimated Google’s growth for the fourth quarter of 2014 to be around $14.7 billion. However, revenues rose only 17%, to the value of $14.5 billion. Revenue in the same period last year stood at the value of $12.4 billion.
However, Google Inc. (NASDAQ:GOOG) still maintains the slower growth should be solely credited to the rising dollar value. According to Google CFO Patrick Pichette, the impact of the dollar rise has caused revenue loss of around $400 million. In a statement released to the press, Pichette stated that company revenues would have showcased growth of 20% had the dollar remained stable in the fourth quarter of 2014.
