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Google still makes lots of money, Motorola doesn't, and Larry Page wants to spend more on 'speculative' R&D

Michael Gorman, @Numeson
October 17, 2013
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"Great is just never good enough," according to Google CEO Larry Page. And on today's Q3 2013 earnings call, the state of Google mirrors its CEO's statement pretty well. Google itself is doing as well as it ever has financially, raking in almost $15 billion in revenue for the quarter. Motorola, however, continues its downward decline, as it posted another $250 million dollar loss in spite of the Moto X launch -- evidently those personalized phones haven't been selling swiftly enough to stem the tide. Page is optimistic about Motorola, as he waxed poetic about its voice recognition features and stated that the Android ecosystem is healthy -- it now numbers 1 billion devices strong, and continues at a pace of 1.5 million more activations per day. The problem? Well, Moto's manufacturing is up to speed, but the process of building marketing and distribution are what's holding Moto back.

Page and Google are also bullish on mobile video, announcing that a full forty percent of YouTube's revenue now flows from phones and tablets. Just two years ago, the video service only got six percent of its cash from such devices. And, as YouTube has continued to beef up its video library -- be it livestreaming events or sponsored weeks of original content -- video continues to grow in importance to Google's overall bottom line. However, when asked about a rumored partnership to broadcast NFL games, the company remained coy. Nikesh Arora, Google's Chief Business Officer would only say that YouTube's always talking to content providers, but remains satisfied with its current business plan.

As for the company's other main hardware, Chromebooks, well, things are looking up there too. Over 8,000 locations worldwide are now selling them, and twenty percent of US school districts have deployed Google-fied laptops. Gotta get 'em on the Google bandwagon early, right?

Naturally, not all topics on the earnings call revolved around making money, there was some talk of spending it, too. Through the first three quarters of this year as compared to last, Google's R&D budget has increased by almost $1 billion. And, if Larry Page had his way, he'd be spending even more. Part of Page's job is to spend on long-term R&D -- projects that are "speculative" according to Page. You know, stuff like Calico, Project Loon and Google's self-driving cars. Current spending on such projects "isn't consequential for Google" according to Page, and he wants to do more of it.

So, in short, we can expect to see more moonshots and a continued emphasis on mobile from Google, and more of the same (financially speaking) from Motorola -- at least until Q4.

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