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Despite Overall Success, Google Posts Disappointing Quarterly Results

Fourth quarter was expected to become Google’s most thriving time in its history. Instead it showed that things haven’t evolved as good as they were expected to over the past few months. In fact, despite overall success, Google posted disappointing quarterly results.

Google might have looked like a sound investment, but the fourth quarter results show that the company was underperforming on both revenue and earnings. The company has failed to sustain Wall Street estimates for the holiday season, as search advertising rates have generated a 9 percent drop in Google shares.

Unsettling news for Google’s investors, particularly after learning that the average price for ads decreased by 8 percent, compared to 2010. According to the company’s executives, the decline was caused by certain technical changes, but it seems that despite these minor tweaks, the total clicks on Google’s ads increased 34 percent.

Larry Page, chief executive officer with Google Inc., said that the company’s push into mobile advertising and the hurdles in the European markets have affected growth in online advertising. Bloomberg writes that the reduced rate helps boost sales but “it also crimps the amount of money Google can collect from advertisers because ads viewed on handsets are considered less valuable than those on a computer screen”.

Analysts that talked with Reuter and Bloomberg have their own set of opinions. Colin Gillis, analyst at BGC Partners LP, said: “Google looks more mortal this quarter. A lot of what Larry Page is doing is a lot more tolerable to investors when the business is firing on all cylinders”.

Herman Leung, analyst at Susquehanna Financial Group, warns that “Google is not invincible” and proof are  the poor results and the drop in price.

Benchmark Co. analyst Clayton Moran, feels that “everyone underestimated how quickly the European online ad market would suffer”. Among other factors, a weak euro meant fewer dollars.

Mayuresh Masurekar, analyst at Colins Stewart, makes a strong point asking whether “it is a onetime thing or is this something that is going to continue because the nature of the business has changed”.

Dave Rolfe, manager of RiverPark-Wedgewood Fund, feels that Google is the sort of company “famous for making improvements for their end-users that have short term negative results”.

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John Colston is currently the leader and coordinator of our team of writers. He lives in Colorado and is collaborating with Ironclad Integrity Unlimited Ltd since 2006.John is a passionate independent journalist with a lot of experience in team building and human resources management.If you have any questions, suggestions or editorial complaints about DailyGossip.org, contact John at John.Colston@dailygossip.org

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