Belfast Telegraph

Sunday 13 July 2014

Google posts record profits

Internet search leader Google recorded its biggest profit yet and began to leave the recession behind.





Revenue growth also accelerated for the first time since the US recession began in December 2007.

The third-quarter results are the strongest indication yet that the internet advertising market is bouncing back from its worst crisis since the dot-com bust at the start of the decade.

Google is considered a good barometer for the state of online commerce because its search engine serves as the hub of the web's largest advertising network.

"The worst of the recession is clearly behind us and because of what we have seen, we now have the confidence to be optimistic about our future," Eric Schmidt, Google's chief executive, told analysts in a conference call.

Mr Schmidt's optimism echoed his public remarks leading up to the earnings release. That sentiment has helped propel Google to a succession of new 52-week highs this week, a rally that continued after the company put out its third-quarter numbers.

Google earned 1.64 billion dollars (£1bn), or 5.13 dollars (£3.20) per share, in the three months ending in September. That represented a 27% increase from £810 million, or £2.54 per share, at the same time last year.

Revenue for the three months ending in September climbed 7% 5.94 billion dollars (£3.7bn) - Google's fastest growth rate so far this year.

In a telling sign that things are picking up again, Google's third-quarter revenue rose 8% from the second quarter. That is the biggest sequential quarterly increase since the end of 2007.

After subtracting commissions paid to Google's advertising partners, the company's revenue totalled 4.38 billion dollars (£2.74bn) - about 140 million dollars (£87.5m) above analyst estimates.

Mr Schmidt and other Google executives left no doubt that they believed the company was poised to scale even greater financial heights in the next year or two.

Among other things, they said the company's popular video service, YouTube, was getting closer to making money three years after Google bought it for £1.1 billion.

Mr Schmidt said Google would start spending more liberally again after skimping on its expenses for the past year. The commitment includes taking on more employees after Google pruned its payroll for the past two quarters, paring its workforce to 19,665 people at the end of September.

Google could be further along the comeback trail than other companies that depend on internet advertising, partly because Google is such a dominant force - it process nearly two-thirds of the internet search requests in the US.

Advertisers are more likely to invest in search marketing because it only costs them when web surfers click on their commercial messages.

Spending on online billboards - the kind of visual advertising that is Yahoo's speciality - is not expected to pick up until the economy gets even healthier.

Yahoo is due to report its third-quarter earnings next week.

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