Google shares traded sharply lower in after-hours trading after the internet giant reported profits which fell below analyst expectations. The company earned $1.21 billion in the last three months of 2007. For the fourth quarter of 2006 Google had earned $1.03 billion, making 2007 fourth quarter earnings higher by 17 percent.
Annual revenue for 2007 was $4.83 billion, 51 percent higher than the $3.21 earned in the 2006 year. Google's net revenue for 2007 was $3.39 billion after Google paid it's advertising affiliates their share. This net revenue was $60 million less than analyst estimates. Google missed the estimates by 2 percent. Google's business model relies on collecting ad revenues both from advertisers placing ads on it's search engine and content pages as well as on affiliate websites. Google affiliate webmasters place Google code on their page which displays targeted ads and then share commission with Google.
Despite high growth for 2007 Google disappointed analysts and investors who are concerned that a US recession would lead to lower advertising revenues for the company. As a result Google's shares have plunged 20 percent since the start of this year. In after-hours trading Google shares fell another $41.60 or 7 percent.
