Google shares slip after ’strong’ 4Q still did not meet some investor expectations

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Ahead of the Bell: Google falls after 4Q report

PHILADELPHIA — Shares of Google Inc. fell Friday after the Internet search giant posted fourth-quarter results that some analysts described as strong, but still weren’t good enough for some investors.

Several analysts were impressed that Google seemed to have regained its momentum in the quarter, with at least one saying the decline in the shares reflected over-speculation on the part of investors.

But Jefferies analyst Youssef Squali, while generally happy with Google’s performance, nevertheless said growth in pricing, measured in cost-per-clicks, slowed to 2 percent from the prior quarter. That compares with a 5 percent sequential growth in the third quarter.

Still, cost-per-clicks showed a year-over-year increase after four straight down quarters.

Squali also noted that Google’s international business slowed to an increase of 16 percent compared with 21 percent in the prior quarter.

However, “we would not read too much into the above issues as we do not believe they represent the beginning of a trend,” he wrote in a research report. “We find Google to be very well positioned for 2010.”

Other analysts agreed. Kaufman Bros. analyst Aaron Kessler said in a research note that Google’s fourth quarter was solid and the sell-off is an “overreaction.”

Oppenheimer analyst Jason Helfstein said he sees “no flaws” in Google’s fourth-quarter earnings report. He deems the price decline as an opportunity to buy shares.

On Thursday, Google reported earnings of $1.97 billion, or $6.13 per share, in the quarter compared with $382 million, or $1.21, a year ago. Excluding one-time items, earnings were $6.79 per share. Revenue rose 17 percent to $6.7 billion. Results beat analysts’ estimates of $6.48 per share and revenue of $4.92 billion.

Shares of Google, based in Mountain View, Calif., were down $20.62, or 3.5 percent, to $562.36 in premarket trading.