Google quarterly results fail to excite
SAN FRANCISCO (Reuters) - Google Inc's quarterly profit beat Wall Street expectations, but its revenue growth was not as stellar as some investors had hoped, sending shares down nearly 3 percent on Thursday.
While the Web search leader's revenue growth of 3 percent slightly exceeded the average forecast, expectations for a bigger beat had been built into Google's stock after Intel Corp's strong report earlier this week.
"The whisper number for revenue growth was probably much higher and they came in a little lower," said JMP Securities analyst Sameet Sinha.
Excluding special items, Google earned $5.36 a share in the second quarter, ahead of the $5.08 per share expected by analysts, according to Reuters Estimates.
Ross Sandler, analyst at RBC Capital Markets, also said Google's earnings per share were helped by a low tax rate.
Revenue totaled $5.52 billion, compared with $5.37 billion a year earlier and the average analyst view of $5.49 billion.
Analysts say Google's search-based advertising model is still the best in the business, but it has never been tested to this degree. It faces a slump in advertising spending due to the weak economy, and a resurgent rival in Microsoft Inc, whose Bing search engine has won early favor.
"In my opinion, Google is gaining market share," said Sinha. "It definitely shows that Google is a best-of-breed company for online advertising, and it's a must buy."
Google Chief Executive Eric Schmidt said on a conference call on Thursday that business appears to have stabilized, but it was "too early to tell" when economic recovery will materialize -- echoing his recent comments on the subject.
Google posted net income of $1.48 billion, or $4.66 a share, compared to $1.25 billion, or $3.92 a share, in the year-ago period.
Shares of Google fell to $430 in after-hours trade on Thursday, from their Nasdaq close of $442.60. The stock had risen about 9 percent in the past three months, compared with a 3 percent increase in the Dow Jones industrial average.
As usual, the company did not provide a financial outlook.
Google said the number of clicks on the ads that run alongside its search results, dubbed paid clicks, increased 15 percent year-over-year in the second quarter, a slight deceleration from the 17 percent clip in the first quarter.
The Mountain View, California, company also said that the cost per click decreased roughly 13 percent year-over-year, but increased 5 percent from the previous quarter.
"It doesn't seem like things are turning around per se. But the revenue per click -- an indication of advertisers' appetite for clicks and for advertising -- was up sequentially, so you can assume that in terms of ad budgets out there, we probably reached a bottom some time in the first quarter," said Richard Fetyko, managing director of Merriman Curhan Ford. Continued...
