Google shares fall as profits come in below expectations
Google's pre-tax profits for the second quarter of 2008, which jumped 35% year on year to $1.25bn (£628m), have failed to meet analysts' expectations, sending its share price down by as much as 12%.
The internet giant's profits for the quarter ending June 30, decreased 5% from the first quarter of the year when they stood at $1.31bn.
Excluding certain expenses, Google shareholders would have earned $4.63 a share, missing the average analyst estimate of $4.74 per share.
The profit performance unnerved Wall Street and Google's shares tumbled by as much as 12% to $470.55 in after-hours trading yesterday. If that decline holds up in regular trading today, it would be the company's biggest drop since its initial public offering in 2004.
Revenues were $5.37bn, representing a 39% increase over second-quarter 2007 revenues of $3.87bn and a 3% increase over first-quarter 2008 revenues of $5.19bn.
Google-owned sites generated revenues of $3.53bn or 66% of total revenues. This represents a 42% increase over second-quarter 2007 revenues of $2.49bn and a 4% increase over first-quarter 2008 revenues.
The company said its revenues from other countries had surpassed its US sales for the first time. In the second quarter, Google said overseas sales amounted to 52% of total revenue.
Revenues from the UK totalled $774m, representing 14% of revenue in the second quarter of 2008, compared to 15% in the second quarter of 2007.
Aggregate paid clicks, which include clicks related to ads served on Google sites and through partner sites using the AdSense program, increased by about 19% over the second quarter of 2007 but fell by about 1% over the first quarter of 2008.
Eric Schmidt, chief executive of Google, said: "Strong international growth as well as sustained traffic increases on Google's web properties propelled us to another strong quarter, despite a more challenging economic environment."
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