Googlemissed analyst expectations — a rare feat for the Internet giant — amid a decline in search-advertising rates.
After the announcement, shares of the company fell more than 10 percent. (Click here for the latest after-hour quote.)
"Expectations had got ahead of themselves for Google, largely because investors don't have a good feel for what happens outside the U.S.," said Stifel Nicolaus analyst Jordan Rohan. "North America has remained strong, but there are parts of the world where there's a lot of economic pressure."
''I would have to assume Europe — particularly Germany and some others undergoing austerity measures — the underlying demand in those countries is weak."
Kim Forrest at Fort Pitt Capital was more blunt.
"Google got hit with the ugly stick," Pitt said. "You've got to ask yourself, 'Where is the money going? What are they spending it on?' I have a feeling it is on platforms like Chrome and Android, and things like that."
Earnings excluding items rose to $9.50 per sharefrom $8.75 a share in the year-earlier period.
Net income climbed to $2.71 billion from $2.54 billion.
Net revenue, which excludes fees shared with partner web sites, jumped to $8.13 billion from $6.37 billion a year ago.
However, both fell short of analyst expectations — the consensus was for earnings excluding items of $10.49 per share on revenue of $8.41 billion.
The revenue shortfall represents a rare miss for Google, which has exceeded Wall Street's revenue targets for the past 8 consecutive quarters.
The amount of clicks on Google's search ads increased sharply during the last three months of the year, but the cost per clicks — the amount of money that Google charges advertisers for the ads — decreased 8 percent from the third quarter and 8 percent from the year ago period.
Google's operating expenses increased to 32 percent of revenue during the fourth quarter, versus 30 percent of revenue at this time last year.
Another new initiative — the fledgling Google+ — appeared to be gaining momentum. Executives said three-fifths of the service's estimated 90 million users ''engage" with it daily, and four-fifths do so weekly. User engagement or time spent on the social network, which Google hopes can eventually take on Facebook, is key to determining future revenue potential.
Google didn't provide guidance for the upcoming quarter or year. The company typically doesn't offer an outlook, which some Google watchers suggested was the likely reason behind the big miss — analysts were flying blind with no help from the company.