Google reported a lower-than-expected quarterly profit on Thursday and predicted further spending to shore up its operations, sending its shares down as much as 9.5 percent.
The world’s top Internet company said it expected to continue to make “significant capital expenditures” after spending $678 million in the fourth quarter on data centers, servers and other equipment.
Wall Street is also keen to see how a U.S. economic slowdown will hit Google, which generates nearly all of its revenue from advertising.
Clayton Moran of Stanford Group said the results were disappointing given the Web search leader’s track record of beating expectations.
“There was a slight softness in revenue which perhaps portends softness going forward due to the … U.S. economy,” he said.
Fourth-quarter net income rose to $1.21 billion, or $3.79 per diluted share, from $1.03 billion, or $3.29 per diluted share, in the year-earlier quarter. Excluding special items, earnings per share amounted to $4.43, falling short of analysts’ average forecast of $4.47, according to Reuters Estimates.
Revenue rose 51 percent to $4.827 billion. Analysts, on average, had predicted revenue of $4.83 billion, with estimates ranging from $4.67 billion to $5.10 billion.
Google shares traded at $522.54 in extended trading, down from their NASDAQ close of $564.30.