Google beats the Street for Q4
While the rest of the online advertising sector cowers in fear of the recession, Google shows an 18 percent growth in sales to $5.7 billion in the fourth quarter over last year. Net income fell on special charges, but management is already cutting costs on failing products.
Google posted $4.22 billion in sales after paying commissions to partners. This beat Analyst estimates of $4.12 billion.
Net income for the fourth quarter was $382 million, 68 percent less than the $1.2 billion in 2007. However this was after writing down charges of $1.09 billion in investments in other companies.
Google’s fundamentals are still strong and operating margins increased to 33 percent from 30 last year. If not for the write-offs, Google would have grown both sales and income in the midst of the recession.
The Mountain View company also announced an Employee Stock Option Exchange program. This program is a voluntary one-for-one exchange for employees with options that are underwater.
Many have been expectantly eying Google’s earnings for an indication of the strength of the online advertising market. While Google’s earning show that the company is strong, that’s not likely to apply to the rest of the industry.
Spending on search advertising dropped 8 percent in the fourth quarter. With Google continuing to grow, other search engines will be left scrambling for its scraps.
Google already dominates the search advertising industry and rivals in the display advertising market aren’t weathering the economic storm nearly so well. Banner advertising networks are seeing their ad prices fall by as much as 54 percent.
CEO Eric Schmidt indicated that the company will, “continue to invest in Google’s core search and ads business.” With rivals unable to gain share of the search engine market, Google seems set to continue its dominance in the sector.
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More evidence that Google really is God.