Google blames growth stall on Nexus 6 supply

Chris Burns - Jan 29, 2015
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Google blames growth stall on Nexus 6 supply

During Google’s Q4 2014 earnings call this afternoon, the company’s Chief Financial Officer Patrick Pichette spoke about the many ups and downs of the past three months. In explaining the downs of this past quarter, Pichette spoke of two points in particular. One was the Exchange Rate between the United States and international consumers. The other reason Pichette gave for Google not hitting goals they’d set for themselves was the less-than-stellar supply they had with the Nexus 6. Pichette also mentioned Google Glass, as it were, as an example of what Google does when a project doesn’t work.

After running through several of Google’s high points for the quarter, Pichette suggested that they “also faced a few challenges as well.”

“On the revenue side, clearly, as you’ve heard,” said Pichette, “the strengthening of the US Dollar resulted in a gross negative currency impact of $616 million dollars, just into Q4. But thanks to our hedging program, that impact was actually attenuated with a net revenue impact of $468 million.”

“Also on the other revenue line, not only did we see that negative revenue line really impact on Play growth, particularly in Japan, but also – while the Nexus 6* was well received as a new phone,” said Pichette, “we had real issues and were unable to secure sufficient inventory to meet the demand that we had forecasted.”

This was clear earlier this year as the Nexus 6 went out of stock more times than once. Pichette also spoke up on what happens when Google has a project that doesn’t work out the way they’d expected.

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“When our teams aren’t able to hit hurdles, but we think there’s still a lot of promise, we might ask them to take a pause and take the time to reset their strategy – as we recently did in the case of Glass.”

“And in those situations where we don’t think the project had had the impact we’d hope for, we do take the tough calls. We make the decision to cancel them, and you’ve seen us do this time and time again.”

*NOTE: Pichette actually said Nexus 7, here, but it was clear he meant Nexus 6, as this was the only new phone released by Google this quarter. “Before we continue to Q&A,” said Pichette, “I was highlighted by the team here that I actually had a slip, I said Nexus 7 instead of Nexus 6. And although the Nexus 7 is still a really great device, what I meant in my comment was to talk about the Nexus 6, which is this amazing device which we launched with the Lollipop launch.”


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