Google defies gloom with strong results

 

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By Stuart Turton and Reuters

Posted on 23 Jan 2009 at 08:50

Google has reported strong sales in its fourth quarter, shaking off the economic gloom hitting its competitors.

The search giant saw revenue rise 18% to $5.7 billion in its fourth quarter, as online retailers attempted to offset falling high street demand with a focus on web ads.

Despite the revenue increase, net income fell to $382 million from $1.21 billion a year earlier as the company felt the brunt of impairment charges related to its investments in Clearwire and AOL.

While the company once enjoyed quarterly revenue jumps of around 50%, the more modest 18% increase is being hailed by analysts still reeling from a series of disappointing reports from Microsoft, Intel and other tech companies.

"It's clear that macroeconomic challenges continue to rob Google of growth, but it seems equally clear that the company continues to make headway in this market, and take share in this market," says Cantor Fitzgerald analyst Derek Brown.

Google-owned sites such as google.com and google.co.uk generated 67% of revenue, rising 22% from a year ago. Traffic acquisition costs, the portion of revenues shared with Google's partners, decreased to $1.48 billion.

However, Google chief executive Eric Schmidt struck a cautious note, saying the last quarter had benefited from the holiday season when many users were seeking retail bargains online.

"Now clearly we're in a worldwide recession as everybody knows, rising unemployment, foreclosures, that sort of thing," he said on a conference call. "But we don't know how long this period will last. We obviously hope it will be short."

The company says the UK, its second-largest market, showed "some softness" due to the weak British pound. UK revenue fell 1% to $685 million.