Is Google’s Motorola Acquisition a DRAG on Margins?

Google’s (NASDAQ:GOOG) second-quarter revenue grew 35 percent, helped by its Motorola Mobility acquisition. The new unit brought in $1.25 billion, which was about 10 percent of Google’s total of $12.21 billion. However, Motorola’s operating loss was $233 million, dragging down Google’s operating margin to 26.2 percent. Without Motorola’s negative 18.6 percent operating margin, Google’s margin would have been 31.3 percent.

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Google’s second-quarter profit increased 11 percent through continued growth in the company’s core Internet search business, to $2.79 billion, or $8.42 a share. It was up from $2.51 billion, or $7.68 a share, a year earlier. Excluding stock-based compensation and other items, profit grew to $10.12 from $8.74 a share.

“We launched a bunch of exciting new products,” chief executive Larry Page said in a statement. “This quarter is also special because Motorola is now part of the Google family, and we’re excited about the potential to build great devices for users.”

In June, the company launched the Nexus 7, a 7-inch tablet that competes with the Apple (NASDAQ:AAPL) iPad, Amazon’s (NASDAQ:AMZN) Kindle Fire, and Microsoft’s (NASDAQ:MSFT) upcoming Surface. It also showed off the Nexus Q for home entertainment, its revolutionary Google Glasses technology, and announced a new version of its Android mobile operating system.

Google has also been using ads on mobile devices to bolster revenue. Total paid clicks rose 42 percent from a year earlier and were up 1 percent from the first quarter. The average cost that advertisers paid Google per click fell 16 percent from a year earlier and rose 1 percent from the previous quarter.

Shares of Google (NASDAQ:GOOG) are trading higher 2.52% this morning at $608 per share.

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