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Search giant/household name Google reported Q1 earnings after the bell Thursday, with somewhat lighter results than expected. While the headline numbers of $14 billion and earnings of nearly $11.60 per share, it's important to account for a few things:

  1. Traffic Acquisition Costs (TAC). These were not deducted from Google's gaudily impressive revenue number of $13.97 billion, but let's subtract its nearly $3 billion ($2.96B) ourselves: this leaves Google with quarterly revenues of $11.01 billion, beneath the $11.24 billion we at Zacks had been expecting. So Google has missed on the top-line.
  2. Stripping out costs including a restructuring, but adding a gain from disc operations, the Zacks EPS actual for Google is $10.00 even. This easily beat the Zacks Consensus Estimate of $8.83, which was a number that had crept up in recent weeks from analyst revisions.

Thus, a textbook version of a mixed earnings report. The 13.25% positive surprise on the bottom line was Google's biggest beat of the past year, and can be attributed somewhat to an 8% effective tax rate, far less than the 18% Google reported in Q4 and a year ago.

Web and Network revenues were in line with expectations, as was the continued dip in "cost-per-click," which was down another 4% year over year, and marks the sixth quarter in a row Google has seen its average ad price rate drop. That said, the deceleration has eased notably of late, so one might cast this in a somewhat favorable light going forward.

Motorola Mobility revenues were less than expected, though this does not account for the recent sale of its set-top box operations to Arris for $2.35 billion, which occurred during Q2. Besides the 17,000 patents Google purchased when it bought Motorola Mobility, the company does not seem to have much use for all the hardware that came along with the deal.

That Google was unable to demonstrate strong revenue growth in the quarter fits the narrative of other big tech firms like Intel (INTC - Analyst Report), and even two others that reported after Thursday's bell, Microsoft (MSFT - Analyst Report) and IBM (IBM - Analyst Report). Companies of this size and with this enormous breadth would indicate that the overall narrative of sluggish economic growth continues, both in the U.S. and globally.

As far as finding that big breakout in revenues for the tech sector, it's looking more and more like we'll have to wait until next quarter...

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