Google 4Q Earnings Nearly Triple

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Google Inc. has grown into a financial juggernaut so quickly its extraordinary growth is starting to look routine — a phenomenon making it more difficult for the online search leader to impress investors.

That challenge became more apparent late Wednesday after Google trounced analyst expectations with a fourth-quarter profit that nearly tripled from the year before. The performance also marked the first time Google’s quarterly earnings have exceeded $1 billion in its eight-year history.

But those achievements weren’t enough to satisfy investors who had driven up Google’s stock price by more than $40, or 9 percent, during the first month of the year in anticipation of an even bigger fourth quarter.

“People were expecting unreasonably lofty results,” said Standard & Poor’s analyst Scott Kessler.

Google shares fell $12.91, or 2.6 percent, to $488.59 in midday trading Thursday on the Nasdaq Stock Market.

For almost any other company, Google’s fourth-quarter results probably would have been an overwhelming crowd pleaser.

The Mountain View-based company said it earned $1.03 billion, or $3.29 per share, during the final three months of 2006. That compared with net income of $372.2 million, or $1.22 per share, at the same time in 2005.

After stripping out gains from tax benefits that were partially offset by expenses for employee stock compensation, Google said it would have earned $3.18 per share. That figure easily exceeded the average analyst estimate of $2.92 per share among analysts surveyed by Thomson Financial.

“To be growing this fast at this stage is phenomenal,” Eric Schmidt, Google’s chief executive officer, said during a Wednesday interview. “Frankly, I could not be prouder of this company.”

American Technology Research analyst Rob Sanderson said Google’s profit wasn’t quite as impressive as it appeared because the company enjoyed an unusually low tax rate of 24 percent during the fourth quarter compared with the full-year average of 26 percent. He estimates Google’s earnings would have only been $2.99 per share, or 7 cents above analyst projections, if not for the lower rate.

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