Despite the fact that Google broke the $10 billion revenue barrier for a single quarter in the final three months of 2011, the company’s share price plummeted following the latest set of financial results.
Google grew its revenue by 27 per cent year-on-year in Q4 2011, but Wall Street had expected the company to do a lot better over the festive season and, as a result, Google’s share price dropped by nine per cent in after-hours trading last night.
The reasons given for the company falling short of the expected levels were numerous, including unfavourable foreign exchange rates, increased spending by Google, changes the company made to ad formats and the sale of more mobile ads, which don’t bring in as much money.
Despite the less-than-expected returns, Larry Page, who was celebrating the one-year anniversary of his ascension to the position of CEO, was upbeat: "Google had a really strong quarter ending a great year."
"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."
Looking at the figures for Google’s social network, Page said that of the 90 million registered Google+ users, 60 per cent of these use it on a daily basis with that figure rising to 80 per cent for those using it at least once a week.
Net income for the fourth quarter rose 6.4 per cent to $2.71bn from $2.54bn a year earlier. Revenue rose even more from $8.44bn to $10.58bn in the same period.
One figure however which drew the attention of most analysts was the cost-per-click figure, which is the amount that advertisers pay for clicks on Google ads. This dropped by 8 per cent over both last quarter and last year, however the number of paid clicks on ads rose by 34 per cent over the past year.
The announcements of these financial results marked Page’s first year in charge and some analysts were less than complimentary about his first 12 months at the helm. “If you ask me to sum up Larry Page’s tenure as CEO, it’s one thing: downward margins,” said Colin Gillis, an analyst at BGC Partners.