It appears as if Google, the internet search giant, is immune against the credit crunch as it reported better-than-expected financial results for the first three months of the year, igniting a huge rally in its shares.
Chief Executive of Google, Mr Eric Schmidt said “We are obviously very pleased with another strong quarter for Google. It is clear to us that we are well positioned for 2008 and beyond, regardless of the business environment that we find ourselves surrounded by."
The results came as a relief to investors, who were bracing for a big slowdown in Google’s business. The company issued its report after the close of markets, and its shares surged more than $76.42 (£39.59), or 17%, in after-hours trading, to end the day at $525.96 (£272.5).
Still, Google’s performance is not likely to ease anxiety among investors about the overall health of the online advertising business. The company relies almost exclusively on short text ads that appear next to search results and on other Web sites. Analysts say that because those ads are more targeted and are used by marketers to drive traffic to their sites, they are more impervious to a slowdown than banners and other graphical ads, which are intended to increase brand awareness.
Google, said net income grew 30%, to $1.31 billion (£678 million), or $4.12 (£2.13) a share, compared with $1 billion (£500 million), or $3.18 (£1.64) a share, in the first quarter of 2007. Revenue climbed 4%, to $5.19 billion (£2.68 billion), from $3.66 billion (£1,89 billion) a year earlier.
On average, Wall Street analysts were expecting Google to report revenue, excluding commissions to advertising partners, of $3.61 billion (£1.87 billion) and income, excluding the cost of stock options, of $4.52 (£2.34) a share.
Google said that DoubleClick, which it acquired in mid-March, had little impact on the company’s finances this quarter. Executives said they were working on integrating the two companies’ products. They said the integration would help growth in Google’s nascent display advertising business. (source: New York Times)