Google's Mobile Miracle

NEW YORK (TheStreet) -- Google's (GOOG) fourth-quarter earnings report showed that mobile worries may be a thing of the past, as a key metric for ads improved quarter over quarter. But Google, though, isn't out of the woods yet.

Cost-per-click (CPC), a key metric for ads, fell 6% year over year, but actually rose 2% sequentially, alleviating some of Wall Street's biggest concerns. The company doesn't break out mobile revenue from desktop revenue, but it's generally believed that mobile ads have been weighing on CPC results, driving down earnings. With CPCs rising sequentially, some believe that the "mobile miracle" is on its way to delivering mobile money for Google.

J.P. Morgan analyst Doug Anmuth said he feels better about the mobile transition going forward.

"As the business continues to shift toward mobile and advertisers think holistically about clicks rather than about which devices they're coming from, we think the Street will as well, and that bodes well for Google," Anmuth wrote in a research note.

For the fourth quarter, Google earned $10.65 a share on $11.3 billion in revenue during the quarter, excluding traffic acquisition costs (TAC). With TAC, Google generated $14.42 billion in sales, up 36% year on year, according to CEO Larry Page. Analysts polled by Thomson Reuters expected Google to earn $10.49 a share on $12.3 billion in revenue in the quarter.

There was still a blemish during the quarter that Wall Street is forgiving: slowing revenue growth. Deutsche Bank analyst Ross Sandler noted revenue growth slowed 1.3% to 20.3% year over year, but Wall Street is giving Google a pass as these are largely self-inflicted changes and not weakness in the company's overall business.

As more users search on phones and tablets, revenue may be at risk, with mobile monetizing worse than desktop, though it looks as if mobile ad rates may have bottomed out with CPCs rising 2% sequentially. The fear on Google is that it will look like Facebook (FB) Sandler noted, but with the U.K. accelerating, which has similar penetration from mobile, this isn't the case.

"We think the U.S. deceleration is from the policy clean-up initiatives, not from desktop vs. mobile mix shift," Sandler said.