Google investors still searching for satisfaction

Google felt the heat from investors today after the United States giant missed earnings hopes and revealed a smaller proportion of its revenues came from the UK.

Around €13bn was wiped from the value of the internet search company last night after a fourth-quarter jump in profits disappointed market watchers.

In the UK - its biggest advertising market outside of the US - blamed “seasonal trends” for a fall in the share of total revenues to 14% in the final three months of 2005, from 15% previously.

Google has its European headquarters in Dublin.

Google earns money when its users click on adverts on its sites.

A spokesman for Google in the UK said: “Internet usage goes down during the holiday season. As Christmas fell on a Sunday, there were fewer working days in December in the UK, with many people not returning to work until well into the New Year.

“There was also an impact from foreign exchange rates with the dollar becoming much stronger than in the previous quarter.”

Despite seeing profits almost double for the final three months of 2005 to $372m (€546m), the company’s earnings per share of $1.54 was well below the $1.76 expected by analysts.

Shares fell 12% in after-hours trading in New York last night – Google’s biggest one-day drop since its flotation in August 2004.

Google said it was continuing to “invest significantly” in new products but did not elaborate on the performance of Google Talk, its internet telephone service and email service G-Mail, which were launched last year.

Google has consistently beaten market expectations by 10% since its flotation and has seen its share price quadruple from an initial $85 to a high of $475.11 three weeks ago.

Some analysts had predicted the shares could reach $600 by the end of the year as Google’s success echoed the dotcom boom of the late 1990s.

Total fourth quarter revenues increased to $1.92bn (€1.6bn), an 86% increase from $1.03bn (€852m) the previous year as advertisers continued to pour money into the Silicon Valley-based firm and traffic on its site rose further.

International growth saw the firm hit with a 42% tax rate, well above the 30% rate for the previous two quarters.

Today’s news follows criticism of Google after it agreed to self-censor its website in China.

The firm recently clashed with the US government after refusing to disclose details of search requests by Google users.

Google denied rumours that it was planning to buy internet music provider Napster.