Google's growth makes it a darling of investors and film stars alike
|
Shares of internet search company Google fell 7% on Wednesday after its earnings fell short of Wall Street expectations for the first time.
The firm said late on Tuesday that fourth-quarter profit rose by 82% to $372.2m (£209m), or $1.22 per share. Analysts had expected $1.50 a share.
Google's stock fell $30.88 to $401.78 in New York amid concerns that the tech-industry giant may be overvalued.
Google's miss comes after rival Yahoo had also disappointed investors.
Since Google listed on the Nasdaq stock index in August 2004, its shares have enjoyed a stellar run that has seen them quadruple in value.
Wednesday's tumble wiped more than $9bn from the market value of Google.
'Very, very high'
Some analysts have now started to question whether they may have overestimated the strength of demand and earnings growth in the technology industry.
"Google is a company that's doing extraordinarily well," said Charles Lieberman, chief investment officer of Advisors Capital Management.
"It just didn't live up to very, very high expectations," he explained.
For Google, Wednesday's drop may prove to be little more than a blip. But it has reminded Wall Street that even one of the most widely-held and admired companies can still produce earnings shocks.
"This shows that Google is not impervious," said Scott Kessler, an analyst at Standard & Poor's.
It was not all bad news for Google, however. While profits may have missed, sales were in line and grew by 86% to $1.92bn as new features including its e-mail service Gmail helped it attract advertisers.