Google Inc’s quarterly earnings beat Wall Street forecasts as strong advertising sales on its self-branded Web sites helped the Internet leader defy the gloom pervading the tech sector.
The results, which sent Google shares up 2.6% in after-hours trading, were a relief for investors who had been stunned by a series of dismal reports from Microsoft Corp, Intel Corp and other tech companies.
Google said fourth-quarter net income fell to $382 million, or $1.21 a share, from $1.21 billion, or $3.79 a share, a year earlier due to impairment charges on its investments in Clearwire Corp and Time Warner Inc unit AOL.
Excluding one-time charges, profit was $5.10 a share, beating the average analyst forecast of $4.95 according to Reuters Estimates.
Revenue rose 18% to $5.7 billion — a shadow of the 50% growth levels that Google used to enjoy, but considered by analysts to be a robust performance given the weak economy and corporate cutbacks in advertising spending.
“It was, all things considered, very good numbers,” said Wunderlich Securities analyst Martin Pyykkonen. “In this market and relative to the numbers that are being put out — I would go so far as to say relative to the numbers that Yahoo probably will put out next week — these will look good.”
Google-owned sites, like google.com and google.co.uk generated 67% of revenue, or $3.81 billion, rising 22% from a year ago. Traffic acquisition costs, the portion of revenues shared with Google’s partners, decreased to $1.48 billion.
Google Chief Executive Eric Schmidt struck a cautious note, saying the last quarter had benefited from the holiday season when many users were seeking retail bargains online.
“Now clearly we’re in a worldwide recession as everybody knows, rising unemployment, foreclosures, that sort of thing,” he said on a conference call. “But we don’t know how long this period will last. We obviously hope it will be short.”
The Mountain View, California business ended the quarter with nearly $16 billion in cash, at a time when many tech and media companies are trading at all-time low valuations.
Google CFO Patrick Pichette told Reuters in an interview that the cash reserves allowed Google flexibility “for the right deal at the right price.”
The company said the United Kingdom, its second-largest market, showed “some softness” due to the weak British pound. U.K. revenue fell 1% to $685 million.
But the rest of Europe performed better, driven by strong performances in Germany, France and the Netherlands, Google said. Overall international revenue, which accounted for 50% of total revenue, was relatively flat.
Google joins International Business Machines Corp and Apple Inc as the few bright spots in a tech sector hurt by sweeping job cuts and cutbacks in corporate and consumer spending.