Google Tuesday reported fourth-quarter revenues of $1.919 billion, an 86 percent increase over the same period last year. Earnings came in at $372.2 million, or $1.22 per share--up 82 percent increase
from last year's 71 cents per share, but below analysts' estimtaes of $1.76. The shortfall sent the stock plummeting 12 percent Tuesday night.
One factor contributing to the miss from a
higher tax rate than was expected, according to Google CFO George Reyes. At the lower tax rate, Google's earnings would have totaled $1.81 a share.
Google CEO Eric Schmidt stressed Google's
investment in long-term growth, rapid growth, and long-term investment. "We're scaling this business rapidly, and we're investing for the long term," he said, focusing on "lots of investment in better
search tools, more personalization, much more content, a lot more focus on advertisers--We're already seeing strong monetization growth from our existing advertisers, and more advertisers are
growing."
In a conference call with press and analysts, Google co-founder Sergey Brin addressed some rumors about the company--including speculation that Google intended to introduce rich media
ads. Brin acknowledged that Google was "open" about new ad formats, but would not allow anything too glaring. "We have increased the number of different formats and sizes that we offer. I expect that
we will continue to do so," he said. "We wouldn't want really outrageously flashy things to distract people from the Web site. That said, we're definitely open to lots of great medium formats."
Despite Wall Street's initial sell-off, some analysts contacted by OnlineMediaDaily were bullish about Google's fourth-quarter performance. "I would say it's a great quarter," said Safa
Rashtchy, managing director at Piper Jaffray. "This is not a miss--as much as the stock may seem to indicate."
eMarketer Analyst David Hallerman concurred, pointing out that while 86 percent is
relatively low for Google--which earlier this year showed revenue growth of around 100 percent--it is nonetheless a tremendous growth rate. "Virtually any other company on the planet would be
delighted to have those kinds of growth numbers," he said. "When you get larger and larger, it gets harder to grow at such high rates."