Google shares slump as revenue misses forecasts

Search giant posts 25% gain in sales, but that's not enough for analysts

Shares of Google (NASDAQ: GOOG) were hammered in extended trading Thursday after the search giant missed revenue forecasts for the fourth quarter.

Google reported net income for the quarter ended December 31 of $2.71 billion, or 6% more than $2.54 billion in the year-ago quarter. The company's revenue was $10.58 billion, up 25% from $8.44 billion last year.

But net revenue -- which excludes traffic acquisition costs of $2.45 billion -- was $8.13 billion, short of the $8.43 billion average expectation of analysts.

This shortfall had an immediate impact on Google shares after hours, with the stock falling to as low as 573.00, or 10.4% below Thursday's closing price of 639.57.

That's a big investor reaction to a revenue miss, especially since Google beat expectations in others areas such as paid-click growth (34% versus the expected 24%) and cost per clicks (down 8% compared to the expected drop of 3.2%).

But Google's capital expenditures of $951 million were far higher than the $813 million expected by analysts.

Nonetheless, CEO Larry Page said he was pleased by what he called Google's "really strong quarter," adding in a statement that he is "super excited" -- not just regular excited -- "about the growth of Android, Gmail and Google+."

According to Page, Google's new social network now has 90 million global users, more than double the 40 million he estimated when announcing Q3 numbers in October. Google+ was opened to the public in late September after three months as an invitation-only social network. The company hopes to challenge Facebook, the leading social networking site with a reported 800 million members around the world.

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