Despite a worsening recession that has curtailed expansion of its online advertising business, during the quarter Google made $382 million, or $1.21 per share, however the gain was much less than it made during the same quarter one year ago, when it made $1.2 billion, an increase of $3.79 a share. A year ago Google failed to meet
analyst expectations by a small amount, however the current estimate-topping earnings came after analysts significantly lowered expectations for the company during the past several weeks.
The profit losses announced Thursday were Google's first in the past 18 quarters, which included a 17-quarter period with profits of at least 17 percent. Google said that it would have made $5.10 a share had it not written down $1.09 billion of $1.5 billion it had invested in Clearwire and Time Warner's AOL unit, up from $3.79 a share from previous year figures.
These one-time charges detracted from an otherwise good quarter for Google that saw revenue increase by 18 percent from a previous year figure of $4.83 billion to $5.7 billion. Between the fourth quarter of 2006 and 2007 Google recorded revenue growth of 51 percent, and the results released Thursday marked the first time the search leader's revenue had dropped under 30 percent from the same period a year earlier.
AdSense Program Accounted For 30 Percent Of Google Revenue
Google had revenue of $4.22 billion after accounting for payments related to advertising partner commissions, some $100 million higher than analysts polled by Thomson Reuters expected.
Google chief executive Eric Schmidt said the results were good during a period marked by continued economic downturns. "Our business is quite healthy, especially given the economic climate," Schmidt said Thursday during a conference call.
"Google performed well in the fourth quarter, despite an increasingly difficult economic environment. Search query growth was strong, revenues were up in most verticals, and we successfully contained costs," Schmidt said in a statement Thursday.
Google's online advertising partners in its AdSense program generated 30 percent of revenue reported by Google, accounting for $1.69 billion, up 4 percent over the $1.64 billion in revenue for the same quarter one year earlier. Ad clicks from Google sites and those of AdSense partners, known as aggregate paid clicks, increased 18 percent from previous year figures.
Google Quarterly Profit Tumbles 68 Percent Yet Tops Estimates
"It’s unclear how long the global downturn will last, but our focus remains on the long term, and we’ll continue to invest in Google’s core search and ads business as well as in strategic growth areas such as display, mobile, and enterprise," Schmidt said Thursday.
Google beat analyst expectations of $4.12 billion in net revenue, which does not include marketing partner commissions, recording $4.22 billion, up from $3.39 billion a year earlier.
Driven by a steep decline in Google stock prices during the past year, today Google also announced an employee stock option exchange program that will allow its 20,222 workers to have a better likelihood of making money from newly-swapped options, Google said. Google added 99 employees during the fourth quarter, although the pace of hiring dropped during the period.
In after hours Wall Street trading Google share prices rose 1.79 percent, or $5.50 per share, to $312.00, after trading for the day closed at $306.50.
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