Google Earnings Fall Well Short of Expectations
Google Inc issued its fourth-quarter results after Thursday's closing bell, falling well short of Wall Street estimates on both earnings and revenue as advertising revenue during the holiday season fell well short of expectations. Investors had assumed that given the brisk online sales over the holidays, Google would have been able to increase prices for its pay-per-click ads, but instead the average price dipped by 8 percent from the 2010 holidays as shoppers headed directly to shopping websites like Amazon and eBay instead of searching for products or gift ideas on Google.
In the three months ended December 30th, Google earned $2.7 billion, or $8.22 a share, up 6 percent from 2010's final three months. Excluding certain one-time items, the search giant would've earned $9.50 a share, badly missing the consensus estimate of $10.51 per share projected by analysts in a recent Thomson Reuters survey. Google also reported that it generated $10.6 billion revenue in the October-December quarter, $8.1 billion if you exclude ad commissions, as analysts do when making projections, meaning the company's revenue fell short by about $300 million.
It wasn't all bad news for Mountain View, California-based Google, however, as it reported that its new Google+ social network reached 90 million users, far short of the 800 million users on industry leader Facebook, but not bad considering the service launched just six months ago. The company also reported achieving some success with some technical changes designed to deliver more ads to users that interest them. The move paid off as the total number of clicks on Google ads increased 34 percent from the fourth quarter of 2010.
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