Google 4Q Profit Misses Analyst Target
Google Inc.'s fourth-quarter profit missed analyst expectations, signaling
the crumbling U.S. economy has dented the Internet search leader's moneymaking
The Mountain View-based company said Thursday that it earned $1.21 billion,
or $3.79 per share, during the final three months of 2007. That's up 17 percent
from net income of $1.03 billion, or $3.29 per share, in the same period a year
If not for stock awards given to its employees, Google said it would have made
$4.43 per share -- a penny below the average estimate among analysts polled
by Thomson Financial.
Revenue totaled $4.83 billion, a 51 percent improvement over $3.21 billion
in the previous year.
In a more important measure to investors, Google retained $3.39 billion in
revenue after paying commissions to its thousands of advertising partners across
The net revenue missed analyst estimates by about $60 million, or just under
The disappointment will likely amplify concerns that Google won't be able to
sell as much online advertising -- the main source of its profit -- as consumers
clamp down on their spending amid ominous signs of a recession in the United
Those worries already have contributed to a nearly 20 percent decline in Google's
stock price this month.
Google shares rose $16.03 to finish at $564.30 in Thursday's regular session
then plunged $45, or 8 percent, in extended trading after the fourth-quarter
results came out.
Although Google's profits are still rising, the fourth-quarter gain was the
smallest in the company's 14 quarters as a publicly held company. And this was
just the third time Google's earnings haven't exceeded analyst estimates.
Google Chairman Eric Schmidt nevertheless said he was pleased with the company's
In addition to the U.S. economy, other issues have weighed down Google's stock.
Investors are particularly concerned about Google's participation in a U.S
government auction of a prized piece of the airwaves that will cost the
winning bidder at least $4.6 billion. The bidding isn't expected to be completed
Although Google could use the 700 megahertz spectrum to make more money from
advertising delivered to mobile phones, many investors are worried the expansion
could become a financial drain and distract management from the company's main
Google ended the year with $14.2 billion. Following through on a pledge made
after its last earnings disappointment in July, Google pulled back on hiring.
The company added 889 workers during 2007's final three months after bringing
in more than 2,100 employees during the June-September period.