Google Earnings Fall Short of Expectations
Posted by aangsunu on 16 July 2010
source : CNBC.com
Google shares dropped sharply in extended trading Thursday after the company reported a profit that failed to match what Wall Street hoped was coming, after a spike in expenses offset a 24 percent revenue jump.
The report marked a rare stumble for a company accustomed to shattering financial expectations.
Google, which is expanding into new products and markets in hopes of maintaining the growth momentum Wall Street also looks for, spent heavily on research and development and hired aggressively.
Some analysts said headwinds from weakening foreign currency did not hurt revenue growth as much as anticipated, as Google managed to surpass targets for net revenue.
“They’re throwing more money into R&D than people were expecting and a little bit less into sales and marketing,” said BGC Partners analyst Colin Gillis. “Google has been pretty clear that it’s going back into investment mode. They added 1,200 people in the quarter, which means more expenses are going to kick in in September.”
The Internet search and advertising giant said it earned $6.45 a share in the second quarter excluding one-time items, up from $5.36 a share last year.
Excluding traffic-acquisition costs (TAC), Google’s revenue reached $5.1 billion in the most recent period, up from $4.073 billion last year.
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