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Google shares tank after disappointing financial report

'Only' 25 per cent revenue growth for quarter

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Google’s share price fell sharply after the company released results that underperformed market expectations, with after-hours trading seeing the stock price fall by nearly ten per cent.

Quarterly revenues broke the $10bn mark for the first time – at $10.58bn they were up 25 per cent on the last quarter of 2011 – but this was still below analyst’s estimates. Earnings-per-share was $9.50, about a dollar short of where Google had been hoped to be.

What’s particularly worrying Wall Street is Google’s continuing reliance on advertising for the vast bulk of its revenue, coupled with a steady drop in the cost-per-click price – the amount Google charges advertisers. This fell 8 per cent in the last quarter, on top of an 8 per cent drop the previous quarter. Annual costs were also a couple of percentage points higher.

“I’m very happy with our results,” Larry Page assured analysts during the earnings call. “We’ve got improved velocity and blew through the $10bn mark.”

Overall, the company was satisfied with the current financials, he said, and they provided a strong platform going forward. That said, he warned that the culling of projects at Google would continue, allowing it to “double down” on sections of the business that showed most promise, such as Google+, Chrome, and Android

Google+ now has over 90 million users – still only a fraction of Facebook’s users but growing fast. The addition of personal searches will help drive traffic to the site, and Page said that numerous improvements had been made, the equivalent of one a day since the launch of the social network.

On the Chrome front, things are going well, with Page describing it as “on fire,” with the browser taking market share faster than had been anticipated. There was no word on the success – or otherwise – of ChromeOS, however.

Android continues to outperform other mobile operating systems, with a total of 250 million handsets now activated to date, up 50 million since November. In two days, over the Christmas period, 3.7 million handsets were switched on. ®

The smart choice: opportunity from uncertainty

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