Google Inc's rapid financial growth decelerated in the fourth quarter as the online search engine leader's profit fell below analyst expectations for the first time since its August 2004 initial public offering.
Tuesday's disappointing financial report rattled previously bullish investors, causing Google's stock price to plunge by more than 12 percent in a backlash that wiped out US$16 billion in shareholder wealth.
Google said its net income nearly doubled from the previous year to US$372.2 million during the final three months of last year.
For most companies, that kind of stellar growth is a reason to celebrate.
But investors have become accustomed to much bigger things from Google, which had been consistently topping analyst expectations during a streak of prosperity that more than quadrupled its market value in less than 18 months.
This time around, Google fell woefully short of clearing the earnings hurdle set by industry analysts. Google's quarterly profit had at least doubled in each of those quarters, too, so even the 82 percent increase reported on Tuesday looked relatively modest.
If not for a charitable donation and stock compensation expenses, Google said it would have earned US$1.54 per share. That fell well below the average estimate of US$1.76 per share among analysts surveyed by Thomson Financial.
Google released its results after the stock market closed on Tuesday.
The company's share price plummeted US$53.65 -- 12.4 percent -- in after-hours trading after gaining US$5.84 to close at US$432.66 on Tuesday on the NASDAQ. The stock had fallen by as much as 19 percent earlier.
The amount of shareholder wealth shed by Google during extended trading exceeded the current market value of General Motors Corp.
The letdown might herald the end of investors' love affair with Google's stock, said Standard & Poor's analyst Scott Kessler.
"If you ask a lot of people on Main Street why they own Google, they will tell you, `Because it goes up every day,'" Kessler said.
"Well, that's a great thesis until it goes down," he said.
One key factor didn't change for Google in the quarter: Advertisers are continuing to pour more money into its Internet-leading search engine as more consumers spend their free time surfing the Web.
Google's revenue for the period totaled US$1.92 billion, an 86 percent increase from US$1.03 billion in the previous year.
After subtracting commissions paid to Google's advertising partners, the company registered fourth-quarter revenue of US$1.29 billion, matching analyst expectations, according to Thomson Financial.
CEO Eric Schmidt told analysts during a Tuesday conference call that the fourth-quarter results topped the company's internal projections.
"We are very pleased with the performance on every level," he said.
Google's management has steadfastly refused to publicly project its earnings potential, making it difficult for analysts to reach the calculations that investors use to appraise a firm's value.
The company would have matched the average analyst estimate if not for a much higher tax rate during the fourth quarter, chief financial officer George Reyes said during an interview on Tuesday.
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