Google’s Earnings Beat Trend
Though not great, for investors faced with a bunch of dismal report from Microsoft Corp, Intel Corp and other tech companies, Google’s results were a relief for investors.
Google reported revenues of $5.70 billion for the quarter ended December 31, 2008, an increase of 18% compared to the fourth quarter of 2007 and an increase of 3% compared to the third quarter of 2008. While this is the first time since Google went public in 2004 that its quarterly revenue growth has been less than 30%, a double-digit increase in this backpedaling economy is reason enough for cheer. After subtracting commissions paid to its ad partners, Google’s revenue rose 4.5% to $4.22 billion — about $100 million above analyst estimates. Net income was $1.62 billion, well over analyst expectations again.
Most of this can be attributed to the fourth-quarter volume of clicks on Google’s ads, which rose by 18% from the same time in 2007. One reason for this might have been merchants buying a higher inventory of search ads to sell their inventory.
Microsoft, on the other hand, not only missed analyst forecasts, but telegraphed its diminishing expectations by disclosing plans to lay off about 5,000 workers during the next 18 months.
Whether Google can continue to buck the trend, remains a big question. If the recession continues, the going might just get difficult.
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Filed under: Business
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