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Larry Page, Google's chief executive and co-founder, celebrated the one-year anniversary of the announcement that he would take over the company with the news Thursday that it had exceeded $10 billion in quarterly revenue for the first time.
But there were no Champagne toasts for Mr. Page. Wall Street had expected Google to do better, and shares dropped 9 percent in after-hours trading.
Google's net revenue and earnings, though strong, failed to meet analysts' expectations. Financial results were hurt by unfavorable foreign exchange rates, increased spending by Google, changesthe company made to ad formats and the sale of moremobile ads, which cost less.
Those factors added to analysts' longer-term concerns that 2012 could be a difficult year for Google as it navigates antitrust investigations, intellectual property litigation over Android, competition from Facebook and the acquisitionof Motorola Mobility, the struggling handset maker.
"Google seems to be outperforming online advertising as a whole, which is pretty amazing," said Jordan Rohan, an analyst at Stifel Nicolaus.
Still, he said, "Google has big-company problems now, or more specifically, huge-company problems."
Mr. Page insisted that there was nothing disappointing about Google's performance.
"I'm very happy with our results," he said on a conference call with analysts."Google had a very strong fourth quarter."
He added, "2012 promises tobe a fantastic year."
Google, based in Mountain View, Calif., reported that net income in the fourth quarter rose 6.4 percent, to$2.71 billion, or $8.22 a share, from $2.54 billion, or$7.81 a share, in the period a year earlier. Excluding the cost of stock options and therelated tax benefits, Google's fourth-quarter profit was $9.50 a share, upfrom $8.75 a year ago. Analysts had expected$10.49 a share.
The company said revenue climbed 25 percent, to$10.58 billion, from $8.44 billion.
Net revenue, which excludescommissions paid to advertising partners, was$8.13 billion, up from $6.37 billion. Analysts had expected net revenue of$8.4 billion.
Google's disappointing results were particularly surprising because it rarely misses analysts' expectations and because the fourth quarter is usually its strongest, fueled by retail ads for online holiday shopping. Indeed, e-commerce advertising on Google was strong during the holidays, mobile advertising increased significantly and display advertising with image and video is on track to generate $5 billion in revenue for Google in the coming year, said Nikesh Arora, Google's chief business officer.
Still, said Colin Gillis, an analyst at BGC Partners, "Q4is Google's time to shine, andit was just O.K. results, so Google looks a bit mortal."
Analysts focused on the amount that advertisers payfor clicks on Google ads, a metric called cost-per-click, which dropped 8 percent over both last quarter and last year.
