Google exceed profit forecasts
Google has shrugged off the faltering global economy to post higher than expected earnings.
On Thursday the company announced first quarter income has risen over $300 million to $1.31 billion, causing shares to surge 18 percent.
It had been widely expected that Google’s advertising revenue might have taken a knock due to a downturn in the economy that has hit U.S. businesses particularly hard, despite earlier assurances from Google’s CEO that the company was well-placed to ride out the slump.
“It’s clear to us that we’re well positioned for 2008 and beyond, regardless of the business environment that we find ourselves surrounded by,” reasserted CEO Eric Schmidt.
Google’s gross revenue climbed to $5.19 billion (42 percent), which was just ahead of forecasts on Wall Street. Although this represents strong growth, it also hints at a possible maturation of the search advertising market when compared with the 63 percent growth experienced in last year’s first quarter.
“This signals that the online advertising market is still healthy, which should help Yahoo get a better price for its company if it does decide to sell to Microsoft,” commented Peter Dunay of brokerage firm Meridian Equity Partners.
The continued strong performance of Google will be a relief to investors after figures from internet research company comScore indicated that the search engine was not converting searches into ad views as effectively as it might be.
Google has recently made additional strides towards increasing the relevancy of the adverts it serves to users, tightening up the quality scoring system it employs.
“Clearly the area that Google was trying to focus on — having more relevant searches — is working,” added Martin Pyykkonen, analyst for GCC.
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