Google profit fails to excite
GOOGLE’S quarterly profit beat Wall Street expectations, but the weak economy and slump in advertising spending took a toll on sales growth and the price of its search ads.
Shares in Google, led by chief executive Eric Schmidt, fell 3 per cent after the results which exceeded average forecasts but failed to live up to the heightened expectations of investors following microchip firm Intel’s strong earnings earlier this week. Stock closed up 1 per cent at $443.
“They did decently, but obviously it’s not high enough for the Street,” said Lame Pour, an analyst at Primary Global Research. Google’s sales in the second quarter rose 3 per cent to $5.52bn (£3.35bn), compared with the average analyst forecast of $5.49bn.
Excluding traffic acquisition costs – the portion of revenue that is shared with Google partners – revenue was $4.07bn. “People were hoping they would see something around the $4.3bn range,” said Brigantine Advisors analyst Colin Gillis. “Google is changing from a top line growth story to an earnings expansion story,” he added.
The company also benefited from a lower income tax rate of 20 per cent, compared with the first quarter’s 25 per cent.