Google's second-quarter profit misses target, shares slip
Google Inc. shares struggled in extended trading Thursday after the Internet giant reported second-quarter earnings that missed lowered expectations on Wall Street.
Google said it earned $1.84 billion, or $5.71 a share, in the three months ended in June. It generated $5.1 billion excluding commissions paid to advertising partners, up from $4 billion last year. Analysts tracking Google on average had expected the company to report a profit of $6.54 a share and revenue of $5 billion.
Google shares, which closed Thursday up $2.68, or less than 1%, at $494.02, lost more than 4% in extended trading. It shares have struggled this year, underperforming the Nasdaq, as investors grow uneasy that Google may have hit the end of its growth spurt.
Investors had been hoping that second-quarter earnings would signal a return of Google's old swagger. They did get good news about online advertising, though. Google is a bellwether for the Internet because it powers the most popular search engine and the largest advertising network. Investors pay close attention to how often Web surfers click on ads and how much marketers pay to reach them. In a positive sign for the rebounding economy, people clicked on ads more frequently and marketers paid more for the online ads that account for nearly all of Google's revenue.
The Internet giant has endured one of its most challenging quarters on record, with a high-profile spat with China threatening its presence there, growing regulatory scrutiny in Europe and the United States, and escalating competition from Facebook and other social networking upstarts reshaping the Internet landscape. Google also faces ongoing questions about when it will come up with another meaningful source of revenue beyond search, whether from mobile advertising or from its online video-sharing site YouTube. Economic issues in Europe are also hurting Google with the U.S. dollar strengthening against the euro, causing a currency shift. Google said in May that it would stop online sales of its Nexus One phone, which it unveiled in January.
-- Jessica Guynn