Google’s $6B in 2005 Not Enough for Wall Street

Google reported that both revenue and net income grew by more than 80% in the fourth quarter of 2005, compared to Q4 2004. But earnings per share for the top search engine did not meet analysts’ expectations, and Google’s stock price dropped more than 16% following the after-hours announcement.

Google’s Q4 revenue came in at $1.92 billion, an 86% increase over the same quarter last year. Net earnings of $372 million were up 82% over the same period. For the full year, Google posted revenue of $6.14 billion, 92.5% over 2004, and net income of $1.46 billion, up from $399.1 million.

The results gave the company earnings per share of $1.54 for the quarter, but a consensus of financial analysts had projected Google’s EPS as $1.76.

Google CEO Eric Schmidt expressed satisfaction with the company’s Q4 and annual results in a conference call following the release. He added that the company sees big potential in international markets and will increase its spending on research and development to “make some really big bets” on new products and services in 2006.

Google’s stock price has fallen more than 7% in recent weeks following downbeat financials from rival search portal Yahoo!, news of a lawsuit by the U.S. Department of Justice over search data, and reports that Google has agreed to black out or censor some of the Internet sites it serves in China. None of these factors were mentioned in the Google earnings conference, which included CFO George Reyes and co-founders Sergei Brin and Larry Page.