Google's earnings lighter than expected

From CNET News.com: Google's second-quarter revenue was up 24 percent compared to last year, but the company missed analysts' targets for earnings.

Excluding traffic-acquisition costs, Google took in $5.1 billion during the quarter, which ended June 30. That compares to around $4 billion during last year's second quarter, leaving out the money Google pays to its partners for traffic. Analysts polled by Yahoo Finance were expecting $4.99 billion in revenue for the quarter.

But reaction to earnings announcements tends to focus on the negative, and for Google, that focus will be on its earnings per share. Based on the GAAP accounting standards, net income for the quarter was $1.84 billion, up from $1.48 billion last year. Analysts evaluate company earnings by excluding certain expenses, like stock-option costs, and by those metrics Google's net income was $2.08 billion, up from $1.71 billion last year.

That translates to earnings per share of $6.45 when you exclude those special items, and the financial community was looking for $6.52. Google shares fell nearly 4 percent in after-hours trading.

The earnings miss overshadowed what in many ways was a solid quarter for Google. More people clicked on ads in the second quarter than they did last year, although paid clicks were down 3 percent compared to the first quarter of this year due to seasonal factors, said Patrick Pichette, Google's chief financial officer.

Revenue from ads on Google's own sites increased 23 percent compared to last year, and revenue from ads on sites that use Google's AdSense technology were also up 23 percent. That combination still accounts for the overwhelming share of Google's revenue, but it inched down slightly to 96 percent of its total revenue during the quarter, as Google slowly starts to earn revenue from non-advertising sources.

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