Declining revenue from search advertising and rising costs saw Google’s quarterly results fall short of Wall Street’s expectations.
The search giant was punished for an 8% drop in the average price of cost-per-click, which includes clicks related to ads served on Google sites and the sites of network members.
According to the company, the drop in the prices advertisers were willing to pay was down to a series of circumstances, but – despite a 34% increase in paid clicks – the out-of-character setback gave investors the jitters.
“The major question is: is this a one-time thing or is this something that is going to continue because the nature of the business has changed?” Mayuresh Masurekar, an analyst at financial advisor Colins Stewart, told the Reuters news agency.
The major question is: is this a one-time thing or is this something that is going to continue because the nature of the business has changed?
According to analysts, the cost-per-click decline was the first time the benchmark had fallen since 2009.
Google still reported revenues of $10.58 billion for the last three months of 2011, 25% more than during the same period of 2010, with company CEO painting a brighter picture than stock watchers.
“Google had a really strong quarter ending a great year. Full year revenue was up 29%, and our quarterly revenue blew past the $10 billion mark for the first time,” said CEO Larry Page.
“I am super excited about the growth of Android, Gmail, and Google+, which now has 90 million users globally – well over double what I announced just three months ago.”
Revenues from the UK totalled $1.06 billion, representing 10% of revenues in the fourth quarter of 2011.
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