Google's Q4 revenue disappoints

Despite economic worries in Europe, Google was still expected to post strong earnings yesterday, but the Mountain View, California-based enterprise didn't hold up to estimates, and stock prices plummeted after hours.

Google reported a fourth-quarter net income of US$2.71 billion, or US$8.22 per share (according to the statement). Non-GAAP earnings were US$9.50 per share on a revenue of US$10.58 billion, including traffic-acquisition costs (TAC) — a 25 per cent increase compared to the fourth quarter of 2010.

Subtracting TAC, which was worth US$2.45 billion, revenue actually only came out to US$8.13 billion.

Wall Street was expecting Google to report a fourth quarter of US$10.48 per share on revenue of US$8.4 billion, including TAC.

(Credit: Google)

After the market closed, Google's stock suddenly plummeted about 9 per cent before recovering.

CEO Larry Page tried to put a positive spin on Google's current financial situation in prepared remarks:

Google had a really strong quarter ending a great year. Full-year revenue was up 29 per cent, and our quarterly revenue blew past the US$10 billion mark for the first time.

I am super excited about the growth of Android, Gmail and Google+, which now has 90 million users globally — well over double what I announced just three months ago. By building a meaningful relationship with our users through Google+, we will create amazing experiences across our services. I'm very excited about what we can do in 2012 — there are tremendous opportunities to help users and grow our business.

As for European concerns, Google only addressed its United Kingdom unit, which makes up the bulk of Google's EU dealings.

Revenues from the UK totalled US$1.06 billion, representing 10 per cent of revenue in the fourth quarter of 2011, compared during 10 per cent in the fourth quarter of 2010.

Google argued that if foreign exchange rates remained constant from the third quarter of 2011 through the fourth quarter, Q4 revenues would have been US$239 million higher.

(Credit: Google)

Nevertheless, international revenue totalled US$5.60 billion, representing 53 per cent of total revenues in Q4, compared to 55 per cent in the third quarter of 2011.

For the first quarter, Wall Street is expecting Google to report earnings of US$10.07 per share on revenue of US$8.28 billion, including TAC.

By the numbers:

• Google employed 32,467 full-time employees worldwide as of 31 December 2011, up from 31,353 full-time employees as of 30 September 2011
• Cash, cash equivalents and short-term marketable securities were US$44.6 billion as of 31 December
• Aggregate paid clicks increased by 17 per cent from Q3 to Q4 2011.

Via ZDNet US