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Google Blames Europe for Profit Shortfall

NEW YORK ( TheStreet) - Google (GOOG - Get Report) shares plunged in late trades Thursday after the Internet search giant posted below-consensus fourth-quarter earnings, weighed down by higher operating expenses and foreign currency fluctuations.

Google reported a profit of $9.50 per share for the December-ended period on revenue of $8.13 billion. Total revenues excluding traffic acquisition costs (TAC) were $10.58 billion. Traffic acquisition costs are the revenues Google shares with its partners.

The average estimate of analysts polled by Thomson Reuters was for a profit of $10.49 per share on $8.4 billion in revenue. Wall Street typically excludes TAC costs from its estimates.

The company said foreign currency fluctuations lowered revenue. If foreign currency remained constant from the third quarter, Google said it would have had an additional $239 million in revenue for the quarter.

Operating expenses, excluding cost of revenue, accounted for $3.38 billion, or 32% of revenue. In the fourth quarter of 2010, operating expenses were $2.51 billion, or 30% of revenue.

Costs per click fell 8% quarter-over-quarter, as well as year-over-year. Simultaneously, aggregate paid clicks, which includes clicks related to Google sites and on network member sites, rose 34% year-over-year and 17% quarter-over-quarter.

"Google had a really strong quarter ending a great year. Full year revenue was up 29%, and our quarterly revenue blew past the $10 billion mark for the first time," said CEO Larry Page in the press release. He noted that Google+, Google's social networking effort, now has 90 million users around the world, more than double what it was three months ago.

As of Dec. 31, Google had $44.6 billion in cash, cash equivalents, and short-term marketable securities, and employed 32,467 full-time employees, up from 31,353 full-time employees in the prior quarter.

The stock was last quoted at $582.40, down 9%, on volume of 1.7 million, according to

Interested in more on Google? See TheStreet Ratings' report card for this stock.

Check out our new tech blog, Tech Trends.

-- Written by Chris Ciaccia in New York

>To follow the writer on Twitter, go to

>To submit a news tip, send an email to: Updated from 11:39 a.m. EST to provide executive comments regarding fourth quarter guidance in the second paragraph.

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