Feeds

Google profits climb 19% amid 'difficult environment'

Schmidt and Co. hail YouTube 'trajectory'

Eight steps to building an HP BladeSystem

CEO Eric Schmidt says Google has yet to find a mathematical model that can predict the future of the worldwide economy. But there's little doubt the company has developed a search ad monopoly capable of weathering the worst financial downturn since the Great Depression.

In the quarter ending June 30, Google revenues climbed to $5.52bn (£3.36bn), a 3 per cent increase over the same quarter last year. And as the company continues to cut costs amidst the global economic slump, profits reached $1.48bn (£0.9bn), a 19 per cent leap.

During a conference call this afternoon with industry analysts and reporters, Google continued to congratulate itself. "[We've] had a good quarter, one that demonstrates our resilience in what continues to be a difficult environment," Schmidt said. "We implemented careful cost controls to help our performance. Making our business more efficient has been our goal for the last two quarters, and it should put us in a good position to benefit from the eventual recovery - whenever that occurs."

Although Schmidt explained that Google can't predict the future, he seemed to indicate that one day it would. "It's too early for us to tell when the recovery will materialize. I wish that we could just prove it, that we could just do the analysis and figure it out, but we don't know how to do that yet."

In the meantime, the Mountain View Willy Wonka said, Google is streamlining its business without cutting back on what he calls innovation. "History shows that companies that invest in innovation during downturns emerge stronger than their cost-cutting competitors," he said. As an example, he cited the Google Chrome OS. But we're not quite why this would be considered innovative. It's a Linux kernel paired with a browser and some hardware drivers.

Schmidt boasted of revenue gains from Google Apps sales, mobile ads, and even YouTube display ads. But the company's core search and text-based AdSense ads for third-party websites continue to carry the load. Google-owned sites generated revenues of $3.65 billion (£2.22bn), or 66 per cent of the company's total revenues, while AdSense revenues reached $1.68bn (£1.02bn), 31 per cent of the total.

Yes, total revenue growth was a mere 3 per cent. But CFO Patrick Pichette boasted that if last year's dollar exchange rates were applied to this year's Q2 numbers, revenues would be $500m (£305m) higher. Google has compensated for the strong dollar at least in part, thanks to $124m (£76m) in benefits from hedging programs Google launched last year to guard against changes in foreign exchange rates.

Google's aggregate paid clicks - that is, paid clicks across all Google sites and partner sites - increased 15 per cent over the previous year. And though the cost of each click is down roughly 13 per cent, Google vp Jonathan "Perfect Ad" Rosenberg indicated that although ad bids had been down earlier in the year, they've now stabilized.

"Bids tended to decline earlier this year," he said. "And are no longer declining now - across the board."

But Google picked up some of the slack by slashing costs. In March, the company jettisoned about 200 sales and marketing folk, while shutting down anemic newspaper and radio advertising operations. Pichette said that year-over-year, operating expenses were roughly $120m (£73m) lower, and they were flat quarter-over-quarter.

Following all the back-and-forth over how much money YouTube may be losing, Schmidt and Co. also made a point of telling analysts and reporters they were pleased with the "trajectory" of the traditionally revenue-challenged video-sharing site.

According to Rosenberg, "monetized views more than tripled over the past year," saying the company is "monetizing billions of views of partner videos every month." Of course, the company - despite several requests from analysts - would not provide any additional insight into YouTube revenues.

"We don't give the economics of YouTube," Pichette said. "What we can tell you is that we're really pleased with the trajectory of YouTube and we're really pleased with it's revenue growth and in the not too distant future, we see a very profitably business for it." ®

Mobile application security vulnerability report

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.