Google disappoints markets
Google failed to set the markets alight with its 2Q performance, unusually missing Wall Street expectations despite growing revenue and net income during the quarter.
The search giant increased net profit from $1.48 billion (€1.1 billion) in 2Q09 to $1.84 billion in 2Q10 on the back of a 24% annual rise in revenues to $6.82 billion.
However non-GAAP EPS of $6.45 was around ten cents shy of the majority of analyst’s forecasts, FT.com reports.
The company can usually be relied on to beat analyst forecasts, having exceeded revenue predictions in five of the last seven quarters, and profit estimates in all seven.
But, with costs rising during 2Q10, analysts are concerned the firm is spending too heavily during uncertain economic times.
Operating expenses increased 22% to $1.99 billion year-on-year as the company continued an acquisition and hiring spree. The firm added 1,200 staff during the period, its highest figure for almost two years, FT.com said.
Google CFO Patrick Pichette defended the firm’s spending, stating it was performing strongly in a weakened economy in a conference call announcing the results, the LA Times said.
Markets were unconvinced, resulting in Google shares on the Nasdaq falling 4.15%, or $20.52, in after-hours trading yesterday.