Friday January 23, 08:14 AM
Google quarterly profit trumps expectations
By Glenn Chapman
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SAN FRANCISCO (AFP) - Google (NASDAQ: GOOG - news) on Thursday trumped expectations and reported a net profit of 382 million dollars for the final three months of 2008 despite a billion dollars vanishing in sinking investments.
Fourth-quarter earnings per share of 1.21 dollars fell far short of the 3.79 dollars per share posted during the same quarter in 2007 but they were hamstrung by one-time charges related to Clearwire and America On Line (AOL (NYSE: TWX - news) ).
Google reported revenue for the recently-ended quarter of 5.7 billion dollars, an 18 percent rise from the same period a year earlier.
"Google performed well in the fourth quarter, despite an increasingly difficult economic environment," said Google chief executive Eric Schmidt.
"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."
Google said revenue rose in almost every online search category.
Google's stock price gained more than two percent to 313.21 dollars per share in after-hours trading that followed the release of the Mountain View, California, firm's earnings figures.
"We saw strong search query growth year-on-year; revenue up, and tight control on costs -- something that has eluded us in the past but we think we have the formula down now," Schmidt said during an earnings conference call.
Google has curtailed hiring, and even eliminated 100 recruiting jobs.
Google's sales force went out and told customers that targeted online advertising is key to making money, especially in dismal economic times, according to Schmidt.
"It is absolutely true the people are shifting to the Web and advertising is going online; and that is good for Google," Schmidt said. "We are optimistic about Google and its future."
Google sees "huge" untapped potential in online search and advertising arenas and is investing in improving query results and the relevance of associated ads, according to executives.
"Wouldn't it be nice if Google understood the meaning of your search phrase instead of just the words," Schmidt said. "We have things we are going to be rolling out."
Schmidt confirmed reports that Google is readying a way for owners of films, television shows and other "commercial video" that pops up on YouTube to add advertising, even if users of the website post content without permission.
"There are deals on their way," Schmidt replied when asked about barriers to making advertising money from video posted at Google-owned YouTube.
"It is fair to say we haven't found a single solution that drives revenue wildly and we are working on that."
Google also announced a plan to let employees trade-in stock options that are "under water" because they entitle holders to buy shares at formerly discounted prices that are now higher than those in the sagging open market.
Workers can opt to exchange stock options for replacements more in tune with the stock market, but must wait an additional year before they can exercise them.
Google said half of its revenue came from outside the United States, but revenues from Britain, a key market, dropped some 90 million dollars from the prior quarter and exchange rates worked to its disadvantage.
Google took 726 million dollars in charges related to its investment in Time Warner-owned AOL and another 355 million dollars in charges related to its investment in Clearwire, a firm building a network for wireless devices.
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