Google tumbled 6.2 per cent in the first 20 minutes of after-hours trading as first-quarter revenue and earnings fell short of analyst expectations, with paid clicks also falling from the last quarter of 2013.
Google reported adjusted earnings up 1.3% to $6.27, just shy of $6.33 a share broker consensus, as revenues grew 19.1% to $15.42bn, with analysts expecting $15.58bn. A year earlier, the company reported per-share earnings of $6.19 on revenue of $12.95 billion.
Paid clicks, which include clicks related to adverts shown on Google's own websites and other sites using its technology, fell 1% on the preceding quarter but rose about 26% compared to the same period a year earlier. Analysts at RBC Capital Markets were expecting a 33% year-on-year increase.
Cost per click, which measures what advertisers pay when web surfers click on ads that appear alongside Google search results, fell 9% year on year, which was better than RBC's forecasts of an 11.1% decline.
Chief Executive Larry Page chose to focus on the positives. "We completed another great quarter. Google's revenue was $15.4 billion, up 19% year on year," he said.
"We got lots of product improvements done, especially on mobile. I'm also excited with progress on our emerging businesses."
Broker Killick said that although the results were slightly below market expectations, part of the explanation was due to one-off factors, while the rate of growth in the group's core website business "remains impressive".
Reiterating their 'buy' recommendation, especially for the C-class shares, analysts wrote: "As a result, we believe the decline in the shares
in response to the results, which follows a period of weakness driven by profit-taking across the whole technology sector, provides a buying opportunity."
A current rating of 16.5 times 2015 earnings, or 15.5 times if you adjust for the excess cash holdings, looks "very compelling for a global leader that offers an attractive combination of growth and innovation".
The broker said it believed that online advertising will continue to see strong growth over the medium term as advertising budgets adjust to reflect the shift of media consumption onto the internet and mobile.
With internet and mobile attracting proportionally less advertising spend than the time spent consuming media, the broker said: "We believe Google remains very well positioned to capture the catch-up in growth in online advertising spending, given its dominant position in search, mobile and online video.
"The group is also a leader in innovation, and has consistently invested in long-term projects, providing optionality on the next big area of technology. In particular, we would highlight the group's presence in new markets, such as wearable computing, robotics, smart cars and home automation."