By Angela Gunn, Betanews
Describing the current economic landscape as "uncharted territory," Google CEO Eric Schmidt acknowledged that his company hasn't been immune from the prevailing mayhem as he announced the search giant's first-ever quarter-to-quarter revenue decline for Q1 2009.
Google on Thursday reported year-to-year growth of 9% -- the first time since IPO the company hasn't posted double-digit growth -- and gross revenue of $5.5 billion. Quarter-to-quarter, gross revenue dropped about $200 million, but it beat market estimates. Operating income was up a bit to 34% of revenues, or $1.88 billion, and free cash flow's in the $2 billion range.
As you might expect, advertising's taken a hit as the recession deepens, though SVP of product management Jonathan Rosenberg was enthusiastic about the effect (for both Google and advertisers) of recent AdWords improvements such as the search terms suggestion tool. Search improvements are making waves on the consumer-facing side too; Rosenberg noted that the company recently rolled out internationally the correction-suggestion tech so beloved of those of us who can't spell. The company found, he said, that visitors have over 800 ways of spelling "Britney Spears."
Today's news of a purse-snatcher nabbed by Google Latitude also made the brag list. The company sees searches (e.g., "auto repair") that indicate that visitors have frugality on their minds no less than advertisers do. "That's what they should be doing," noted Schmidt.
Seasonality is also a factor as the company enters the traditionally slower summer months -- revenues decrease, but payroll expenses and the like do not. (Of course, the recently announced layoffs of about 200 sales and marketing folk will be reflected in Q2, not Q1.) The relative strength of the dollar contributed $120 million of unpleasantness to the final numbers.
Looking forward, the Google execs on the call spent a significant amount of time in the interesting position of talking about the next announcement of the day without actually saying what it will announce. That press conference, which is believed to reveal YouTube's upcoming response to Hulu, is slated for 2:30 pm EDT.
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Earnings per share worked out to $4.49, an increase of 37 cents/share from Q1 2008, or $5.16/share excluding certain employee compensation costs. That worked for the analysts, who expected $4.93 for Q1; the market agreed, sending the stock up about $2.75 in after-hours trading.
Copyright Betanews, Inc. 2009