Google's Earnings Positive But In 'Uncharted Territory'
CEO Eric Schmidt admits Google users are buying less and that Google ads are converting less frequently, but he notes that advertisers are still spending.
Google shares rose more than 2% on Thursday in anticipation of a positive quarterly earnings report from the company and against the backdrop of a stock rally precipitated by positive news from the Federal Reserve.
Google delivered slightly better results than analysts expected. It reported first-quarter 2009 revenue of $5.51 billion, a 6% increase compared with its first quarter in 2008 and a 3% decrease over the $5.70 billion the company reported for its fourth quarter of 2008.
"Google did well in managing expectations," said Mukul Krishna, global director of digital media at Frost & Sullivan. "There's no industry that's recession-proof. By showing results above expectation, they're able to remain the poster child of the Internet."
The company's revenue was in line with estimates, but its earnings-per-share figure -- $5.16 non-GAAP EPS -- was better than anticipated ($4.93), a sign that cost controls are working. Its operating expenses came to $1.52 billion in the first quarter of 2009 (28% of revenue), compared with $1.65 billion in the fourth quarter of 2008 (29% of revenue).
In a conference call for investors, CFO Patrick Pichette said that while Google has a reputation for being an unconventional company, its first-quarter spending showed that the company understands responsible fiscal management.
At the Goldman Sachs Technology and Internet Conference in February, Pichette said that Google was tightening its belt and avoiding expenses like business-class flights.
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