Google Going Down

Google (GOOG) traded down $8 Thursday morning, after reporting fourth-quarter revenue and earnings that topped estimates and even met the highest of expectations. But a run-up in shares ahead of the results, and weaker-than-expected margins may be reasons why investors aren't jumping up and cheering.

Another slight negative was the costs Google incurred due to Checkout. Google paid out about $32 million in the quarter, which hit revenue by about 1%.

As for YouTube, Google executives did not break out how much the video-sharing site was contributing. Google CEO Eric Schmidt was not very forthcoming with details, but he did say that some form of revenue-sharing with content creators would be rolled out this year. He also said that Google is not yet clear on what type of advertising will support the videos, though he didn't rule out pre-roll, post-roll and contextual advertising around the videos.

As for what Google reported. Google hit the high end of expectations in sales as net revenue came in at $2.234 billion. Analysts expected the search giant to generate $2.19 billion. Some investors expected Google to generate as much as $2.24 billion. Net revenue is gross sales minus the fees Google pays out to its distribution partners. Google also earned $3.29 on a GAAP basis. Analysts expected Google to earn $2.91, and some investors expected as much as $3 per share.

One weak result was Google's cash flow. On a cash flow basis, estimates for Google were $1.38 billion, for a 62.8% margin. Google reported cash flow of $1.384 billion, for a 62.1% margin