61million of Google’s net revenue missing – consequences of US economy recession

The deceleration of the US economy and the continued drop of American dollar value have considerably harmed Google stock value causing its 20% decline. However, the officials of Google, Inc. have ensured investors that the recession would not have any serious impact on the forecasted Google earning in the upcoming year. Basing on the financial report submitted for Q4 Google's revenue totaled $4.83 billion that corresponds to 51% improvement in comparison to $3.21 billion achieved last year. At the same time Google shares dropped by more than 6% from their Friday value with closing price $564.30 after the company release Q4 results that missed the expectation of the analysts. The company had missed the net revenue of $60 million. The earnings could be even lower from declared value if Google wouldn't receive extra points benefiting from low tax rate of 25% in the quarter, comparing to regular rate of 27% that brought 11 cents per share less.

It is partly explained by the ineffectiveness of the company's formula for posting the adverting links that resulted reduction of revenue-generating clicks number. Total paid clicks in Q4 jumped to 30% basing on the same period in 2006, clicks paid by Google raised at a clip of 45-52 %.  To the biggest disappointment Google was unable to get forecasted revenue from fast growing social networks as MySpace. Google promised owners of MySpace News Corp payments totaling $900 million within 4-year contract, ending in 2010 that can be lost if the hopes of revenue-generating clicks on MySpace wouldn't come true. It would definitely worsen the current situation. Investors concern that online advertising revenue may considerably eliminate in the USA due to the troubleshooting period in the US economy. 

At the same time, according to research analyst Sanderson "I don't think much has changed in Google from yesterday to today. They are still in a sweet spot", evaluated in 60 % e-market share segment. Wonder, if the Google's flagmanship would remain flagman in the nearest future ?

Natalia, reporter of Ecommerce Journal