Google misses analyst estimates by 4 cents -- Takes a Beating !!!

Google Inc reported disappointing quarterly results on rising capital spending and costs for acquiring advertising customers, unnerving investors who sent its shares down 6.5 per cent.

Revenue rose 51 per cent to $4.827 billion, just shy of the $4.83 billion, on average, analysts had forecast. A rising level of payments to affiliated sites that deliver Google ads, called traffic acquisition costs, also surprised some.

“This quarter was softer-than-expected across the board,” Cantor Fitzgerald analyst Derek Brown said. “Revenue from Google websites was a little bit lower and traffic acquisition costs were slightly higher than we had expected.”

The disappointment was especially pronounced given the Web search leader's record of beating expectations, analysts said.

It was only the third time in 14 quarters as a public company that Google failed to top Wall Street profit forecasts. But Google executives underscored their belief that there were no signs that a weakening US economy so far was hurting its own results and that they expect advertisers to maintain spending with Google even if they slash overall ad budgets.

“We have not yet seen any negative impact from the rumors of future recessions,” Chief Executive Eric Schmidt told investors on a conference call, challenging investor psychology that has clobbered global stock markets in the past month.
Rival Yahoo Inc said that key online ad categories remained strong, but it had felt weakness in travel, financial and retail.

Yahoo depends on display ads preferred by brand marketers, while Google's focus is on Web search ads. Google's fourth-quarter net income rose to $1.21 billion, or $3.79 per diluted share, from $1.03 billion, or $3.29 per diluted share, in the year-earlier quarter.

Excluding special items, earnings per share were $4.43, short of analysts' average forecast of $4.47, according to Reuters Estimates. Wall Street analysts said Google's weaker-than-expected results had any number of contributing factors.