…sending a warning shot to Yahoo! and Microsoft
Google reported better-than-expected profits in Q4 2008, despite the melt-down in the consumer economy.
Google’s sales rose as established online retailers were joined by high-street retailers building their online presence which together greatly increased demand for paid search (PPC). The increased spend by high-street retailers was evident as they tried to compensate for falling sales offline.
As a result, total revenue, including the commission Google pays to third-party sites to drive traffic, in the final quarter of 2008 was $5.7bn (£4.1bn), up 18% on the same period a year earlier, and up 3pc on the third quarter.
Google sends a warning shot to its big rivals Yahoo! and Microsoft
An 18% increase in revenue for a company the size of Google, against the background of worst economic conditions for many years, is one hell of an achievement and sends a further warning shot to Yahoo and Microsoft who still need to resolve their online search strategies, after their failed merger attempt late last year.
Google’s profits actually declined in the period, to $382.4m from $1.2bn earned in the same period last year but only due to $1.09bn of exceptional write-downs of investments in AOL and Clearwire. This was Google’s first decline in profit since its shares began trading in August 2004. Google’s shares rose $5.60 to $312.10, which is still well short of October 2007 highs above $700-a-share.