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Google's Rare Miss: 2Q Net Income Lower Than Expected


By Scott Campbell, ChannelWeb
6:22 PM EDT Thu. Jul. 17, 2008
Google shares fell nearly 8 percent after the market closed Thursday, when the company announced financial results that did not meet analysts' expectations.

While other Internet companies have been hit as the economy has slowed, Google has usually delivered positive revenue and earnings surprises over Wall Street expectations each quarter.

"It's hard to love the numbers," Colin Gillis, analyst at Canaccord Adams told Reuters. "There's the initial shock of this being the best company in the space and it just fell short."

Shares fell to $491.62, down $41.82, after the company announced earnings of $1.25 billion, or $3.92 per share, on revenue of $5.37 billion. The figures compare to earnings of $925 million, or $2.93 per share, on revenue of $3.87 billion in the year-ago quarter. Wall Street was expecting earnings of $4.72 per share. Google's earnings were $4.63 per share excluding stock-based compensation costs, according to the Mountain View, Calif.-based company.

Google said interest income and higher foreign curreny expenses caused it to miss expectations.

CEO Eric Schmidt said the health of the company was not a problem during the quarter, despite a more challenging economic environment.

"As we continue to focus on innovating in our core business of search, ads and apps, we also look forward to enhancing the experience of our users and expanding the reach of our advertisers and partners with new technologies and formats, particularly as our integration of DoubleClick gains momentum and creates new opportunities in display advertising and elsewhere," Schmidt said in a statement.

Google-owned sites generated $3.53 billion in sales, a 42-percent increase from the second quarter last year. Network revenue, generated through AdSense programs, generated $1.66 billion, a 22-percent increase from the year-ago quarter.


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