High Bar Hits Google

Updated from Jan. 31

That's the trouble with high expectations.

After blowing by Wall Street's earnings forecasts and clearing revenue predictions as well, shares of GoogleGOOG slipped Thursday in the wake of the company's fourth-quarter report.

The stock was recently off 0.9%, or $4.34, to $497.16.

On Wednesday, Google reported $3.18 a share in adjusted earnings, far ahead of the $2.92 analysts surveyed by Thomson Financial forecast. Net revenue of $2.23 billion also exceeded the consensus estimate of $2.19 billion.

And revenue would have been even higher were it not for Google's aggressive promotion during the quarter of Checkout, its online payment service that has huge potential down the road, even as it makes Google's ad platform more attractive to merchants in the meantime.

While Google wasn't specific about amounts, the company listed its backing of Checkout as contra-revenue, meaning that it was deducted from the overall revenue figure and may give a muted impression of the company's bottom-line growth.

It's the kind of performance that most investors in a company would happily take. Except that for investors looking at Google, the quarter looks remarkably similar to the third quarter which preceded it. Then, Google exceed the consensus EPS numbers by 8%, as compared with the slightly higher 8.9% this time around. The company cleared revenue estimates by about 3.3% then, a bit more than the 1.8% this time around, but a figure that would be even closer were it not for the Checkout promotion.