GOOG Earnings: Google Delivers Massive $10.58 Billion Quarter, Disappoints Investors On Net Revenue,

Google reported record revenues of $10.58 billion for Q4 2011 and roughly $38 billion for FY 2011. Quarterly revenues were 25 percent higher than Q4 2010 revenues. Expectations for Google were extremely high, however, and net revenue disappointed Wall Street consensus estimates. The stock is down in after-hours trading.

Google’s own sites were responsible for $7.29 billion (69 percent of revenues). Google’s extended network generated $2.88 billion or 27 percent of overall Q4 revenue.

Net income was $2.71 billion vs. $2.54 billion in Q4 2010.

Revenues from outside the US were $5.6 billion or 53 percent of the total. That’s down very slightly from Q3 2011 and up a point vs. Q4 2010. UK revenues were $1.06 billion (10 percent of total revenues).

Paid Clicks increased approximately 34 percent vs. a year ago.

CPCs were down 8 percent vs. last year but up by the same amount over Q3 2011. (Investors were very upset/concerned about this decline.)

Traffic acquisition costs ticked up slightly from Q3 but were basically flat vs. 2010, and represented 24 percent of total revenue.

Cash on hand was $44.6 billion.

Google employees on a global basis: 32,467 full-time employees as of the end of the year.

The highlight of the press release is the following statement attributed to CEO Larry Page: “Google+, [ ] now has 90 million users globally – well over double what I announced just three months ago.”

Earnings call update:

Here are some data and milestones shared by Google CEO Larry Page:

1. Google+: 90 million users; over 60 percent engage daily and over 80 percent engage weekly.

2. 700K Android handsets actived daily (we’ve already heard these numbers)

3. 250 million Android devices in total (new)

4. GMail: now has more than 350 million active users

5. Display advertising: now has a $5B annualized “run rate.”

6. Google tops Fortune’s “best places to work” list

Page discussed the shuttering of under-performing products (e.g., Google Buzz) and the “doubling down” on successful products or those with momentum.

Google CFO Patrick Pinchette went over the numbers above in a more “technical” way.

Nikesh Arora Senior Vice-President and Chief Business Officer touted the offline sales benefits of online and specifically search advertising. He cited studies that demonstrated impressive ROI in offline sales (I missed the specific numbers he shared).

Arora also mentioned in passing several examples of mobile advertising success stories but didn’t share any specific revenue figures.

He said that there are now more than 1 million Google+ Pages (enterprises).

Susan Wojcicki, Google’s SVP of Ads, began by promoting the benefits of “Search Plus Your World.” She then went on at length about ads quality and the relationship between paid clicks and CPC pricing.

She also spoke about new ad formats and ad unit types, including dynamic search ads that insert product inventory data.

AdWords Express: customer sign-ups have “tripled in the past 6 months.”

Google Offers: live in 30 cities, with national offers and offers from partners.

And now the financial analyst Q&A:

1. Question about mobile usage. Arora said that usage has grown “by leaps and bounds” but no specific data was exposed.

2. Display run rate includes what? $5 billion display run rate includes both PC and mobile (no text ads).

3. Android monetization beyond search? Page answered “We see a lot of potential to make money on Android” but didn’t go into details.

Several questions came back to declining CPC rates and sought to understand what may have caused it. Several analysts speculated aloud that migration to mobile and lower mobile CPCs may be responsible. Google acknowledged this may have been a factor but didn’t confirm this broader thesis.

Google pointed to an increase in paid clicks as a very positive indication, in contrast to the decline in CPC rates.

Question on Google+ and vision about how it will improve “engagement” across properties; and will FB and Twitter open up eventually? Larry Page offered positive statements and generalities about growth and engagement.

Question about Google Wallet: Susan W. said, “We’re continuing to invest in our Wallet business; we are very excited about Wallet.”

Question about Motorola acquisition: Larry Page said that nothing will change about Google’s Android strategy and that it will keep the company at arms length in terms of the overall Android ecosystem. Google said it won’t show favoritism toward Motorola.