A penny less sent the Google Stock plunging

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Feb 01 2008
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It appears after Yahoo Inc. (Nasdaq: YHOO, stock) screwed with its earning announcement, Google followed although with a smaller magnitude. While Yahoo reported a 23 percent drop in its fourth-quarter profit, Google Inc. (Nasdaq: GOOG, stock) registered a higher profit of $1.41 billion – 14% jump compared to last year.

Google also announced earnings for the period were $4.43 a share, a penny short of Thomson Financial’s estimate which was seeking $4.44 a share – enough for investors to punish the stock by 6.5 percent during after-hours trading after traded up almost 3 percent at the closing bell of normal trading hour. This was the second time in a year the company missed earnings and the first time its quarterly profit has climbed by less than 25 percent.

Google afterhours tradingNet revenue came in at $3.39 billion compared to Thomson Financial estimate of $3.45 billion. On the other hand, revenue from international operations grew to $2.32 billion, or 48% of total revenue, compared to 44% in the period a year earlier. Revenue from the AdSense program rose to $1.6 billion in the quarter, compared to $1.2 billion in the period a year earlier. But co-founder Sergey Brin said Google’s AdSense program saw some difficulty in the quarter, due to challenges in getting users to click on related ads.

Since the economy meltdown, investors are concerned that it could potentially hit the internet giant with potential cutbacks in spending on online advertising. However during the earnings announcement Google Chief Executive Eric Schmidt denied the company was affected by the recession’s impact. Google admitted it hired 889 new employees in the fourth quarter – which could contribute to the overall bottom-line.

One real concern is the Google’s intention to move into mobile communication. Google is currently participating in a Federal Communications Commission auction of wireless spectrum, which can be used to provide access to the mobile Internet. It is believed the bid could cut a whopping $4.7 billion from Google’s pocket. Could the sell-off, which definitely will happens when market open Friday, follows through? It would be nice to scalp some pocket money to cover the losses from Call Options.

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