* Q4 adjusted EPS $6.79 beats Street view $6.48
* Net revenue, cost-per-click disappoint some analysts
* Headcount increases, after three quarters of decline
* Shares fall about 4 pct
(Adds CEO and analyst comments, earnings details, byline;
updates stock move)
By Alexei Oreskovic
SAN FRANCISCO, Jan 21 Google Inc (GOOG.O)
posted a higher-than-expected fourth-quarter profit, but
revenue growth was not as strong as some investors had hoped,
sending its shares down 4 percent.
Analysts also pointed to signs that Google was ramping up
spending as a possible cause for concern, but said that overall
the company continued to dominate the Internet search market
and delivered a strong quarterly report that fell short of only
Wall Street's most bullish forecasts.
Google's problems in China have been an overhang on the
stock, which is down about 12 percent since hitting a 52-week
high in early January. The company said last week that it might
have to close its China operations after a cyber attack and its
decision to stop censoring search results.
Chief Executive Eric Schmidt said on Thursday that the
China business is unchanged but the company expects to make
changes in a "reasonably short time from now."
Google's fourth-quarter profit per share, excluding items,
was $6.79, above the year-earlier period's $5.10 and beating
analysts' average forecast of $6.48, according to Thomson
Net revenue, which excludes the traffic acquisition costs
Google paid to partners, rose 13 percent to $4.95 billion,
which was at the low end of some estimates for 13 percent to 15
percent growth. The average forecast was $4.92 billion.
Expectations "got higher as they came closer to reporting
and they delivered fundamentally sound numbers, but did not
deliver a blowout," said Martin Pyykkonen, senior analyst at
Janco Partners. "I think the stock will recover. I don't think
it will fall through the floor.
Other analysts pointed to a disappointing 2 percent
sequential rise in average cost per click, which is the price
advertisers pay Google when Web surfers click on an ad.
"Earnings were much ahead of expectations, but top-line
fell slightly below expectations," said Sameet Sinha, analyst
at JMP Securities. "I think that is because cost per click was
up about 2 percent sequentially, and we had been expecting
closer to 5 percent growth."
Google, the world's No. 1 search engine, said its headcount
increased to 19,835 employees in the quarter, reversing three
consecutive quarters of declines. And the company said it
expected to continue to make significant capital expenditures.
"As we enter 2010, we remain hugely optimistic about the
Internet and are continuing to invest heavily in technological
innovation for the benefit not only of our users and customers,
but also the wider Web," said Schmidt in a statement.
He said on a conference call that he expects Google to
continue to make an average of one acquisition a month, and saw
the mobile business providing the fastest revenue growth
outside of search on a percentage basis in 2010.
Net income was $1.97 billion, or $6.13 a share, in the
three months ended Dec. 31, compared with $382.4 million, or
$1.21 a share, in the year-earlier period when the company took
charges for its investments in AOL Inc AOL.N and Clearwire
Total revenue at Google rose 17 percent to $6.67 billion.
Revenue from outside the United States was 53 percent of the
total. Google does not disclose the size of its business in
China, where it lags home-grown search powerhouse Baidu Inc
(BIDU.O), but analysts peg Google's annual China revenue at
between $200 million and $600 million.
Google shares fell about 4 percent to $556.75 in
(Reporting by Alexei Oreskovic; Additional reporting by
Tiffany Wu, Sue Zeidler and Gina Keating; Editing by Richard