Google shares dip as results fall short
San Francisco - Google shares fell in extended trading on Thursday as the internet search and advertising giant posted strong revenue growth but failed to meet Wall Street expectations.
The Mountain View, California-based company said second-quarter net profit increased 24% over a year ago to $1.84bn.
Revenue also rose grew year-on-year by 24% to $6.82bn but increased by only 1% compared with the first quarter, apparently disappointing investors.
Adjusted earnings per share of $6.45 came in slightly below the $6.52 expected by Wall Street analysts and Google shares tumbled 4.21% in after-hours electronic trading at $473.20.
Google chief executive Eric Schmidt said the company had a strong second quarter with "solid growth in our core business and very strong growth in our emerging businesses."
"We saw strength in every major product area, as more and more traditional brand advertisers embraced search advertising and as large advertisers increasingly ran integrated campaigns across search, display, and mobile.
"We feel confident about our future, and plan to continue to invest aggressively in our core areas of strategic focus," Schmidt said.
Google, which has been on a buying spree lately, snapping up a number of firms, said it had $30.1bn of cash and securities on hand as of June 30, up from $26.5bn a year ago.
Google said it had 21 805 full-time employees at the end of the quarter, about 1 200 more than a year ago.
In a conference call with analysts, Patrick Pichette, Google's chief financial officer, said Google was making strides in display advertising.
Display advertising includes banner ads, sponsorship and rich media ads and is distinct from the search-related advertising format dominated by Google but which has been showing signs of a slowdown in growth recently.
"Our display network, which includes YouTube, is growing very rapidly and we see increased demand from traditional brand advertisers in that space," Pichette said.
He said Google had entered into a strategic agreement with Omnicom Media Group to partner on display advertising.
Pichette also welcomed the recent court ruling in Google's favor in the copyright case filed against YouTube, which Google purchased in 2006, by US entertainment giant Viacom.
He said Google had made "a significant investment of approximately $100m to win this case."
Pichette declined to say if YouTube has achieved profitability but said "we're incredibly pleased by its trajectory, it's a great business for us."
Pichette said the 1 200 employees added over the past year included members of AdMob, a mobile advertising network which Google purchased for $750m to compete in the rapidly growing mobile advertising space.
"We have a very competitive mobile advertising platform now," Pichette said.
Other hires were in engineering, sales, search monetisation, display advertising, mobile and applications - "the next billion dollar businesses that are growing rapidly," Pichette said.
Asked about China, where Google has been embroiled in a dispute with the authorities over cyberattacks and censorship, Pichette said "the good news is we have our license renewal."
China last week renewed Google's license to operate in China, the world's largest internet market.
Pichette also said that "from a financial perspective, revenue from China is not material to our revenue."
He declined to comment further "given the sensitivities."
Nikesh Arora, Google's president of global sales operations and business development, said Google has seen "good growth in Brazil, India and Russia."
"It's a combination of more advertisers, it's a combination of internet penetration getting higher," he said.