Google's Net Income Climbs Less Than Expected, and Shares TumbleGoogle Inc.'s second-quarter net income rose 35%, but the results disappointed investors and shares fell nearly 10% in after-hours trading.
"Strong international growth as well as sustained traffic increases on Google's Web properties propelled us to another strong quarter, despite a more challenging economic environment," said Chief Executive Eric Schmidt.
What to expect from other major companies -- including analyst forecasts for profit and revenue -- as they report quarterly earnings
The search-engine giant reported net income of $1.25 billion, or $3.92 a share, compared with $925.1 million, or $2.93 a share, a year earlier. Net income fell from $1.31 billion, or $4.12 a share, in the first quarter.
Excluding stock-option costs, the company said per-share earnings were $4.63.
Revenue jumped 39% from a year earlier to $5.37 billion. Traffic-acquisition costs totaled $1.47 billion. Revenue was up 3% from the first quarter.
A Thomson Reuters analyst survey projected earnings of $4.74 a share, excluding stock-based compensation, on revenue of $3.87 billion, excluding traffic-acquisition costs.
Google's U.S. paid clicks for the second quarter rose 19% from a year earlier, but fell 1% from the first quarter.
Google's U.S. paid clicks for the first quarter grew 20% over the year ago period, a sharp deceleration from the company's 30% growth rate in its 2007 fourth quarter and 45% growth in the 2007 third quarter. However, some analysts have argued that the slower click growth is a result of steps Google has taken to weed out less lucrative advertisers.
One of the company's major efforts to grow advertising sales -- at YouTube - has hit snags as some companies have been reluctant to advertise next to amateur videos. Copyright litigation has also complicated matters.
Earlier this week, Google went to Washington in an effort to sell lawmakers on its advertising partnership with Yahoo Inc. The deal, seen by many as a lifeline for Yahoo as it fends off unwanted suitors, has faced antitrust concerns. Microsoft Corp., one of those suitors, opposes the deal, saying it would create a monopoly in search advertising.
There were signs that Google has slowed its spending: The company added 448 employees in the quarter – relatively low by Google standards – bringing its total to 19,604.
In after-hours trading, the company's shares fell 9.9% to $479.70. The shares ended the regular session at $532.15, down 0.6%.
By: Jay Miller
Wall Street Journal; July 17, 2008
