BEIJING, Feb. 2 -- Google Inc's fourth-quarter profit nearly tripled as the online search engine leader once again sprinted past analyst expectations, but the breathtaking growth still was not enough to propel its high-flying stock to new heights.
The Mountain View-based company said on Wednesday that it earned US$1.03 billion, or US$3.29 per share, during the final three months of 2006. That compared with net income of US$372.2 million, or US$1.22 per share, at the same time in 2005.
After stripping out gains from tax benefits that were partially offset by expenses for employee stock compensation, Google said it would have earned US$3.18 per share. That figure easily exceeded the average analyst estimate of US$2.92 per share among analysts surveyed by Thomson Financial.
"To be growing this fast at this stage is phenomenal," said Eric Schmidt, Google's chief executive officer. "Frankly, I could not be prouder of this company."
The initial reaction among investors, though, was less enthusiastic. Google's shares climbed US$7.18 to close at US$501.50 on the Nasdaq Stock Market before the earnings came out. The shares then fell US$6.70, or 1.3 percent, in extended trading.
American Technology Research analyst Rob Sanderson said Google's profit was not quite as impressive as it appeared because the company enjoyed an unusually low tax rate of 24 percent during the fourth quarter compared to the full-year average of 26 percent. He estimates Google's earnings would have only been US$2.99 per share, or seven cents above analyst projections, if not for the lower tax rate.
What's more, Google's revenue after paying ad commissions was just US$40 million higher than the average estimate. Given Google's commanding lead in Internet search, many investors might have been anticipating bigger things.
"Everything was solid, but it wasn't the type of blowout quarter Google has delivered in the past," said Global Crown Capital analyst Martin Pyykkonen.
Even so, "there is no question that this was a very good quarter," Standard & Poor's analyst Scott Kessler said. "No matter how you look at it, they notably exceeded expectations. It's just that all the good news is already priced into the stock."
To some extent, Google has already spoiled investors by topping analyst expectations in all but one of its 10 quarters as a publicly held company.
During that stretch, Google has earned US$4.8 billion on US$18.6 billion in sales, translating into US$26 of profit on every US$100.
The hefty profit margin is one of the reasons that Google's stock has increased by nearly sixfold from an initial public offering price of US$85, minting the eight-year-old company with a market value of about US$150 billion.
(Source: Shanghai Daily)
