By Rob Hof

Jan 31, Business Week

Google didn’t miss Wall Street’s fourth-quarter earnings estimates by much, but it’s Google and every little shortfall matters. The miss was enough to send its stock falling about 7% in after-hours trading. The search giant said its net profit rose 17%, to 1.21 billion, or $3.79 a share. Subtracting stock awards to employees, profit was $4.43 a share, a penny shy of analysts’ estimates.

Sales rose 51%, to $4.827 billion, just a hair under analysts’ estimates. Revenue after payments to marketing partners, known as traffic acquisition costs, was $3.39 billion, also shy of analysts’ $3.45 billion estimate. Google doesn’t give guidance, so its results are often subject to guesswork by analysts.

After Yahoo missed estimates on its fourth-quarter earnings, investors were looking to Google for clues to whether the economic slowdown would hit online advertising. With the conference call about to start, it’s not yet clear what accounts for the earnings shortfall, or at least the perceived shortfall. But with sales more on target than earnings, it looks like expenses, in particular those traffic acquisition costs, came in high. More to come as the call starts...

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