Google shares drop as 86% revenue leap fails to meet expectations

by Julia Pearlman, Brand Republic 01-Feb-06, 09:00

LONDON - Google has announced revenues of $1.9bn (£1.1bn) for the quarter ending December 31 2005, up 86% from the year before but well below what analysts had been predicting for the company.

Google's share price was down by almost 12% in after-hours trading to $381 after it reported earnings of $1.54 a share. Reuters reports that analysts had estimated an average of figure of $1.77 a share. The share price decline sees some $20bn wiped off Google's market valuation, a fall of over $50 a share.

Google's growth was hit by higher than expected taxes, unfavourable foreign exchange rates and falling revenues in its international business -- particularly in the UK.

The search giant said that 57% of its revenues, or $1.1bn, was generated by Google-owned sites. Google's partner sites generated revenues, through AdSense programmes, of $799m.

The company said it earned net income of $372m in the fourth quarter of 2005, up from the $204m reported for the same period in 2004.

For the year, Google reported total revenues of $6.14bn, up by 92.5% on the 2004 figure.

Eric Schmidt, CEO of Google, said: "We are very pleased with our results for the fourth quarter as we achieved excellent performance across our businesses. We generated significant revenue growth in our core search and advertising business, driven by continued strength in traffic and monetisation."

He also vowed to continue to invest significantly, although Google has denied reports that it is set to take over the music download firm Napster.

If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the Forum.