Google's moneymaking machine misfired badly in the fourth quarter as its advertising prices fell during the holiday marketing season.
The results fell way below the lofty expectations of stock market analysts, causing Google's shares to plunge more than 9% after the numbers were released.
Google earned 2.7 billion US dollars (£1.8 billion), or 8.22 dollars (£5.35) per share, during October to December - a 6% increase from 2.5 billion dollars (£1.6 billion), or 7.81 dollars (£5.08) per share, on the same time in 2010.
If not for certain items, Google says it would have earned 9.50 dollars (£6.18) per share. Analysts surveyed by FactSet had expected 10.51 dollars (£6.84) per share.
Revenue climbed 25% from the previous year to nearly 10.6 billion dollars (£6.9 billion).
After subtracting ad commissions, Google's revenue totalled 8.1 billion dollars (£5.3 billion). That was about 300 million dollars (£195 million) below the average analyst forecast.
The disappointing performance stemmed from a surprising downturn in the prices that the internet search leader collects for each click. The average price declined 8% from the same time in 2010.
The erosion reversed what had been happening earlier in the year. The year-on-year increases in Google's price per ad click had ranged from 5% to 12% increase in the first three quarters of 2010.
The fourth quarter marked the first time Google's revenue surpassed 10 billion dollars (£6.5 billion) for any three-month period in the company's 13-year history.
Reaching that milestone was not enough to impress investors. Google shares shed 58.56 dollars (£38.10) to 581.01 dollars (£378.03) in extended trading.
© 2012 Press Association