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January 20th, 2012 
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Google’s high spending offset major gains in revenue and subscriber numbers, casting a shadow as the search giant stakes its reputation on expansive future projects amid legal woes.
Google’s revenue increased 29 percent in 2011, and Google+ doubled its membership numbers. The numbers beat earnings reported in last quarter’s successful showing, coming in at over $10 billion for the first time.
Despite the sizable quarterly revenue reported, Google’s high costs pushed its actual net revenue below shareholder expectations, casting a shadow on its search-advertising business.
Analysts noted an 8 percent loss in cost-per-click, the amount of money advertisers pay to promote their products. Google relies on advertiser fees for the bulk of its revenue, so this drop reflects poorly on the company’s expected future earnings in that sector.
Google CEO Larry Page put a positive spin on the numbers, adding “I am super excited about the growth of Android, Gmail, and Google+, which now has 90 million users globally — well over double what I announced just three months ago.”
Page’s assurance contrasts with the growing concerns of investors and analysts, who predict problems if Google overspends on its new business ventures, especially its bid to purchase Motorola.
Concerns about mounting expenses damaging the bottom line are nothing new to Google. The company faced criticism in the past about its expenditures on Chrome, Google+, and other new features, and analysts are scrutinizing its acquisition of Motorola along the same lines.
Google plans to use Motorola technology to develop its own line of smartphones. However, its Motorola deal runs the risk of alienating current carriers of the Android OS, like mobile giant Samsung. Though the company assured Android phone makers that it would not favor Motorola after the buy-out, makers remain skeptical.
Moreover, the company faces a bevy of international antitrust charges, which makes investors nervous.
The pressure is on for Google to deliver on its sizeable investments, putting high stakes on its Motorola buy as well as its social network initiative.
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