Google's fourth quarter revenue and net income both rose by more than 80 per cent in the quarter, which ended December 31, 2005.
However, the company missed the consensus earnings-per-share forecast of financial analysts polled by Thomson Financial.
The consensus forecast had been for pro forma earnings per share of $1.76, but Google reported only $1.54 on that basis. Pro forma earnings per share exclude certain items.
Google met analysts' $1.29 billion revenue consensus expectation, excluding money it pays to third-party affiliates of its online ad network.
Total revenue grew 86 per cent to $1.92 billion compared with last year's fourth quarter. Net income according to GAAP (generally accepted accounting principles) increased 82 per cent to $372 million, or $1.22 per share.
Stocks tumble on good news
At press time, the stock was down 12.6 per cent at $377.99 in after-hours trading, having recovered some lost ground after an initial sell-off that took it down almost 20 per cent.
This is the first time Wall Street has roughed up Google's stock, which has been appreciating steadily since the company's shares began trading publicly on the Nasdaq exchange in August 2004. Google's stock closed at $100.34 on its first day of trading and has seemed unstoppable, particularly when it closed north of $400 for the first time in November of last year. Its 52-week high is $475.11.
Google is different from most publicly traded companies in that it doesn't provide guidance on what it expects its revenue and earnings to be in its current and future quarters. Consequently, expectations from financial analysts vary widely in Google's case.
Growth in all areas
Google's top executives said they were extremely happy with the company's financial performance during the fourth quarter.
"We had very strong growth in our core search and core ad business," said Google Chairman and CEO Eric Schmidt.
"We're very pleased with our Q4 results. We're investing aggressively in our business and scaling rapidly to pursue enormous opportunities for long-term growth," said chief financial officer George Reyes.
Google experienced strong revenue growth internationally in Europe, Asia and Latin America and plans to continue beefing up its operations abroad, Reyes said.
"We continue to see international expansion as a key area of opportunity and investment. We remain underpenetrated in several markets and are focusing our efforts on building out our infrastructure to bring more localised products to these markets," he said.
Executives noted that Google got hit with a higher-than-expected tax rate of 41.8 per cent during the quarter, because its proportion of total expenses allocated to international operations was greater than anticipated. Consequently, profits were taxed at a higher domestic tax rate, they said.
Google-owned sites, such as Google.com, generated 57 per cent of the quarter's revenue while the rest came from other companies that carry ads sold by Google and that split that revenue with the search engine giant.
Google ended 2005 with 5,680 full-time employees, compared with 3,021 at the end of 2004.