Google profit rises in Q4

NEW YORK -- Web search leader Google Inc. said today that its quarterly profit rose as its ability to capitalize on Web advertising gained momentum against rivals such as Yahoo Inc. and Microsoft Corp.
Google shares fell more than 3% to $484.83 after the company reported total revenue growth that was largely in line with Wall Street expectations, despite some investor hopes of an upside surprise.
Net income for the fourth quarter grew to $1.03 billion, or $3.29 per share, compared with $372.2 million, or $1.22 per share in the year-earlier quarter.
Gross revenue rose 67% to $3.21 billion. The figure includes $976 million in traffic acquisition costs (TAC), the financial cut that affiliated Web sites receive for featuring Google advertising.
Analysts on average had been looking for a net profit of $2.64 per share, according to Reuters Estimates. Excluding stock-based compensation and other items, the consensus forecast was for a profit of $2.91 per share.
Wall Street analysts had also projected revenue of $3.14 billion, representing a year-over-year-growth rate of 64%. Forecasts ranged from $2.99 billion to $3.27 billion.
Google has posted steady market share gains for most of the past year in Web search and is expanding into a variety of new markets, aiming to sustain its rapid growth. For 2007, the consensus revenue forecast estimates about 45% growth, according to Reuters Estimates.
The company is also pushing into a variety of new advertising formats beyond its classic pay-per-click text ad business, including radio, video, newspaper and corporate brand ads.
Heartened by these gains, investors helped Google's stock jump above $500. Before the results, the stock was up 9% in the first month of 2007 compared with a 1% rise for the Standard & Poor's 500 Index in the same period.