Google shares plummeted yesterday following news that the search giant’s performance for Q4 2011 had come in below predictions.

Despite reporting a 27% increase in revenue, Google shares fell by 10%. In the last three months of 2011, it reported revenues of $10.6bn, with net profit increasing by 6.4% to $2.7bn.

Meanwhile, Microsoft posted flat earnings, reporting $6.62bn over the quarter, following strong business demand for software and services and a successful Christmas period for the Xbox games console.

Intel exceeded expectations, reporting a 6% increase in earnings to $3.36bn, owing to increased PC demand in China and developing markets, and despite losing production capacity of hard drives and other components when factories were destroyed by record flooding in Thailand.

Despite the number of clicks on Google ads increasing significantly, the amount the firm is able to charge per-click fell by 8% over the previous quarter. And economic pressures outside the US appeared to have squeezed revenues, with austerity measures and currency fluctuations in Europe making a sizeable dent, just under $240m.

Google’s CEO Larry Page was upbeat in the face of his firm’s disappointing results. “Google had a really strong quarter ending a great year,” he said. “Full year revenue was up 29%, and our quarterly revenue blew past the $10 billion mark for the first time.

“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,” he added.