Google Bullish in Face of Investors' Jitters

04 February 2008

MOUNTAIN VIEW, California: Despite bullish pronouncements from Google ceo Eric Schmidt (pictured), investors reacted nervously to the web giant's fourth quarter figures, which revealed a 17% rise in profit and a 51% growth in sales.

The numbers, of which the likes of rival Yahoo can only dream, disappointed analysts' loftier expectations and triggered a 7% slide in Google's share price.

The company's Q4 profit increased to $1.21 billion (€813m; £607m) from $1.03bn, but the numbers marked a decline from 46% growth in Q3, raising the specter of slowing growth over the long term.

Revenue increased to $4.83bn billion, up from $3.21 billion for the same period in 2006.

Schmidt remained resolutely upbeat, claiming the creaking US economy was not causing an adspend slowdown on Google. He insisted: "We have not seen any impact as of now." 

He declared he was "very, very pleased with our year and also with the quarter that just ended". 

The search titan maintains advertisers are likely to turn to the web amid recession fears because tracking the success of an online campaign is easier than with other media.

Jonathan Rosenberg, svp product management, took-up and ran with his boss's shiny outlook, claiming Google might even benefit from the economic turmoil: "If people are doing more comparison shopping and looking for bargains, that could be a positive." 

Standard & Poor's analyst Scott Kessler agrees with Google's assessment of the situation – up to a point.

"I don't think Google's ad model is insulated from a recession, but it is probably less vulnerable to cutbacks than other online ad models and definitely than traditional advertising."

Google co-founder and president for technology Sergey Brin acknowledged the company had been stung by lower-than expected returns from advertising on social networks such as MySpace.

But he was confident about social networking's long-term prospects for generating revenue, and that Google's experiments to encourage users to click on ads would yield success in future quarters.

Data sourced from New York Times; additional content by WARC staff