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Sauce settlement sours Google results

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As expected, Google's first quarter as a publically-traded company was its best yet, with the ad broker raking in revenues of $805.8m in the three months ending 30 September. But the cost of settling its patent dispute over core technology with arch-rival Yahoo! took the shine off the results. The deal, which went in Yahoo's favor (see Google! Licenses! Yahoo's! Secret! Sauce!) boosted general and administrative expenses to $241m, ten times the usual.

After accounting for $67m in stock-based compensation, net income was $51.9m. However, thanks to the IPO total assets have more than doubled to $2.88bn, of which $1.85bn is cash and short-term investments.

The astronomical growth of the past two years is, as the company predicted, slowing too as the classified ad market matures. Last year 33 per cent quarter-on-quarter growth was the norm, while the last two quarters have clocked in at 7 per cent and 15 per cent respectively. Traffic acquisition costs remain the major drag, increasing as a proportion of Google's costs as an increasing share of its revenue comes from non-Google properties.

Google's international operations now account for 35 per cent of its revenues, the highest to date, and the company will be cheered by AOL Europe's decision this week to drop Overture for Google. The company finished the quarter with over 2,600 permanent employees, 1,200 more than a year ago. ®

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