Google reported its second quarter results after markets closed Thursday, posting a 28 percent rise in quarterly profit that fell short of consensus expectations -- despite rapid international growth and market share gains. Eric Schmidt, chief executive of Google, cited a "seasonally slow quarter.”
Google shares slipped roughly 7% in after-hours trading.
Second-quarter net income rose to $925 million, or $2.93 per diluted share, compared with the year-ago quarter's $721.1 million, or $2.33 per share. Analysts surveyed by Thomson Financial had predicted quarterly earnings per share of $3.59, on revenue of $2.683 billion.
The second quarter net income figures constituted a drop from the $1 billion reported in the first quarter of 2007.
Gross revenue rose 58 percent to $3.87 billion -- matching Wall Street's consensus forecast.
Google's quarterly profit gains were largely offset by a rise in costs for adding staff, say industry watchers.
"The story is they've blown it [profit] on expense... Operating expenses were much higher than everyone was expecting," said Jeffrey Lindsay, analyst at Sanford C. Bernstein. He added, "these guys have been spending like drunken sailors."
“Our performance once again demonstrates the strength of our core search and ads business. The growth in our global traffic combined with our ongoing improvements in monetization resulted in solid revenue growth, even in a seasonally slow quarter,” Schmidt said in a statement.
Going forward, analysts are calling for Google to have, on average, third-quarter earnings per share of $3.76 on revenue of $2.874 billion. Full-year consensus estimates are for earnings per share of $1.490 on revenue of $11.395.
As a matter of policy, Google declines to provide financial guidance to Wall Street.
On Friday, Google announced that it would join in an upcoming wireless spectrum auction -- with a minimum bid requirement of $4.6 billion -- if the U.S. Federal Communications Commission adds a key competitive condition.
The search-technology company said it'd enter the auction if the winner were required to offer open-access services, which would support wireless devices and software and application downloads of third parties.
Google says the requirement would foster greater competition.
FCC Chairman Kevin Martin had offered a spectrum-auction plan last week that only suggested the open-access requirement only apply to some of the spectrum being auctioned. Google's CEO said the government's plan didn't go far enough in spurring on competitiveness.