Google shares plunged yesterday after the company reported Q4 2011 results that fell short of market expectations.
Although Google posted a 27% year-over-year increase in revenue, its stock dropped about 10% on the news. For the final quarter of 2011, revenue reached $10.6 billion, while net profit rose 6.4% to $2.7 billion.
In contrast, Microsoft reported broadly flat quarterly results, posting $6.62 billion in revenue amid strong demand for its business software and services and a healthy holiday season for its Xbox game console.
Intel surpassed forecasts, reporting a 6% rise in earnings to $3.36 billion. The company benefited from increased PC demand in China and other emerging markets, despite supply-chain disruptions caused by severe flooding in Thailand that affected production of hard drives and other components.
One of the key concerns for Google was a decline in the average amount it could charge per ad click. Although the total number of clicks on Google ads rose substantially, the cost-per-click fell about 8% versus the prior quarter. Additional pressures from international markets—particularly austerity measures and currency volatility in Europe—also reduced revenue by roughly $240 million.
Despite the disappointing market reaction, Google CEO Larry Page struck an optimistic tone. “Google had a really strong quarter ending a great year,” he said, highlighting that full-year revenue grew 29% and that quarterly revenue topped the $10 billion threshold for the first time.
Page also pointed to user-growth milestones for several Google products. He said he was “super excited” about the progress of Android, Gmail, and Google+, noting that Google+ had reached 90 million users worldwide—more than double the figure he had announced just three months earlier.