Google’s net income in the fourth quarter of 2011 was $2.7bn (£1.74bn), compared to $2.54bn (£1.64bn) this time last year. Analysts had been predicting a $3bn plus quarter on the back of a strong holiday sales period, which Google has failed to capitalise on.
Google’s quarterly revenues passed $10bn (£6.5 bn) for the first time in its history. 53% of this came from outside the US ($5.6bn), and 10% of which came from the UK ($1.06bn).
The company saw a key part of its original business model, the average cost-per-click (CPC) for advertising fall by 8%, its first loss since 2009. However, total paid clicks increased approximately 34% over this time last year. Advertising remains resposible 96% of Google’s total revenue.
Google’s shares dropped from $639.57 at close to $584.49 (8.61%) at the time of print on the announcement. Much of the blame has been laid at the economic troubles in Europe, which Google also claimed caused shaky foreign exchange rates to wipe $239m off its fourth quarter revenues.
Industry concern also stems from Google focusing too much attention on its new businesses, such as its Android smartphone operating system, the Chrome web browser, Youtube, and Facebook competitor Google+, at the expensive of its core business – online ad sales.
"I am super excited about the growth of Android, Gmail, and Google+, which now has 90 million users globally – well over double what I announced just three months ago. By building a meaningful relationship with our users through Google+ we will create amazing experiences across our services. I’m very excited about what we can do in 2012 – there are tremendous opportunities to help users and grow our business," said CEO Larry Page.
The company’s proposed takeover of Motorola Mobility is still awaiting regulatory approval, and will cost the company $12.5bn.
4Q Key Figures (compared to 4Q 2010)
Revenue: Up 25% to $10.58bn from $8.44bn in 2010.
Net income: $2.71bn from $2.54bn (up 6.3%).
Paid Clicks – Up 34%.
Cost-Per-Click Down 8%.
Operating Expenses – Up 26% to $3.38bn from $2.51bn.
Cash – $44.6bn at December 31.
