Google reports slower growth amidst slowdown

18 April 2009

Even super-successful Google is feeling the pinch of recession as it reported slower profit and sales growth in the first quarter. The company also announced that its head of global sales, Omid Kordestani, would become a senior adviser to the CEO and Google's founders. Nikesh Arora will take over Kordestani's old job.

Net income climbed 8.9 percent to $1.42 billion, or $4.49 a share, the company said yesterday. Excluding revenue passed on to partner sites, sales were $4.07 billion, compared with the average analyst estimate of $4.1 billion.

Google reported first-quarter revenue of $5.51 billion, up 6 percent from the year-ago quarter but down 3 per cent from the 2008 fourth quarter - its first ever sequential decline. The figure was in line with average Wall Street expectations.

Google said paid clicks, by Web surfers on its text-based search ads, rose 17 per cent in the first quarter from a year earlier. But the revenue that Google derives per click appears to have declined, as advertisers reduced the bids they make for keywords in Google's auction-based advertising system.

''We're still basically in uncharted territory,'' CEO Eric Schmidt said on a conference call. ''The current economic environment, which everybody is all very, very familiar with, remains tough.'' "Google is absolutely feeling the impact. Users are still searching but they're buying less. Ultimately, what that really means is the ads are converting less, '' he added.

Schmidt said Google did not have any intention of changing its "conservative view toward cash management," in a sign that a major acquisition may not be on the near horizon. However, Schmidt said Google would be happy to pursue an advertising partnership with companies like Twitter, the microblogging site that is often cited as a possible acquisition target for the Internet search giant. (See: Google reportedly in talks to buy Twitter)