Google’s profit took a dive in the fourth quarter, which ended Dec. 31, while revenue grew almost 20 percent, the company announced Thursday.
One-time investment write-downs were the primary cause of the earnings drop. CEO Eric Schmidt and other executives said during a conference call to discuss the results that the company’s performance during the quarter had been strong and that they were satisfied, considering the current global economic problems.
“We had strong search query growth year-on-year, revenues were up in most verticals, and we had tight control of our costs, something which eluded us perhaps in the past, but we got the formula down now,” Schmidt said.
Google reported revenue of US$5.70 billion, up 18 per cent compared with the $4.83 billion in 2007’s fourth quarter. Subtracting the commissions Google pays to its ad network partners, revenue came in at $4.22 billion.
Net income was $382 million, or $1.21 per share, down from the $1.2 billion, or $3.79 per share, recorded in 2007’s fourth quarter.
Google executives expressed continued confidence in the company’s business model, which relies overwhelmingly on pay-per-click (PPC) text ads delivered along with its search engine results and in Web pages of third-party sites.
This type of ad is the most popular online format, accounting for about 40 percent of online ad spending, and Google has a market share of about 75 percent of search ad spending, according to various industry estimates.
As is customary for Google executives, Schmidt declined to make forecasts, but he expressed optimism that Google will be able to weather the global economic recession, thanks to its business model and to its management strategies in both the short and the long term.