Google earnings grow, but fall short of expectations

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Google unveiled strong fourth quarter results late yesterday that almost kept pace with expectations, but showed international markets and social networking still hold more potential.

Fourth quarter revenue for the internet giant was up 51 per cent year-on-year over the period ending 31 December 2007, totalling $4.8 billion (£2.4 billion). Income for the period was $1.21 billion (£608 million), compared to $1.01 billion (£507 million) in the third quarter.

While strong results, they fell short of the expectations as polled by financial analyst First Call's consensus of $4.44 earnings per share, coming in one cent lower at $4.43.

Eric Schmidt, Google's chief executive and chairman, said in a conference call that international markets still held a lot of potential for the company, referencing the fact that the results showed continued growth in markets outside the US.

Although revenue from international markets stayed flat from last year's third to fourth quarters at 48 per cent of total revenue, that's still up from 44 per cent for the same period in 2006.

Social networking will also be an area of focus for Google in 2008, as its launch last year of OpenSocial, a development platform for social-networking applications, failed to generate the fourth quarter earnings it expected.

Although it said the platform now had 20 industry partners, it did not break out specific earnings for OpenSocial. George Reyes, Google's chief financial officer, said on the conference call: "We're still learning how to monetise social networking."

The executives said other highlights included continued strong growth from its acquisition of YouTube in 2006 and its progress in the mobile space, citiing itsAndroid platform and development on the iPhone platform.

It also said Google's partner sites generated revenues of $1.64 billion (£824 million), or 34 per cent of total revenues. Those numbers represented a 37 per cent increase over network revenues of $1.20 billion (£603 million) generated in the fourth quarter of 2006 and a 12% increase over third quarter 2007 revenues of $1.45 billion (£703 million).

Schmidt remained cautious about the effect of the global economic downturn on the company's fortunes, however. "We'll see what happens," he said, adding: "We have not yet seen any negative impact from the rumours of a future recession."

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