Slump in ad rates hurts Google's second quarter

SAN FRANCISCO Google's financial performance faltered in the second quarter as a downturn in the Internet search leader's ad prices deepened.

The results announced Thursday show Google (GOOG) is still having trouble navigating a technological transition driving more online activity on to smartphones and tablets. Those devices pose a challenge because their smaller screen sizes fetch lower ad rates than on traditional desktop and laptop computers.

Google's stock fell more than 5 percent in extended trading.

Google Inc.'s average ad rate fell by 6 percent from the same time last year during the three months ending in June. It marks the seventh consecutive quarter of falling ad prices.

Google earned $3.2 billion, or $9.54 per share, up 16 percent from $2.8 billion, or $8.42 per share, a year earlier.

Revenue rose 19 percent to $14.1 billion.

Despite the lower ad rates, Google CEO Larry Page focused on the increased revenue and the potential from mobile ads.

"The shift from one screen to multiple screens and mobility creates tremendous opportunity for Google," he said in a statement. "With more devices, more information, and more activity online than ever, the potential to improve people's lives even more is immense."