Original URL: http://www.theregister.co.uk/2008/04/18/google_1st_quarter_earns/

Google earnings soar despite paid click dip

Take that, Doubting Thomases

By Dan Goodin

Posted in Financial News, 18th April 2008 03:42 GMT

Google has stuck it to the naysayers by reporting higher-than-expected earnings - even as the weakening US economy and research showing a slowdown in ad clicks raised doubts about the search king's continued prospects. Shares, which have declined about 35 per cent this year, rose 17 per cent following the report.

The Mountain View, California-based company said it earned $1.31bn, or $4.12 per share, during the first three months of the year. That's a 31 per cent increase from net income of $1bn, or $3.18 per share, in the same period last year. Excluding expenses for employee stock options, Google would have earned $4.84 a share, 32 cents higher than analysts had expected.

Revenue rose 42 per cent, from $3.66bn to $5.19bn.

To be sure, some of Google's performance was the result of the rise of overseas currencies, which added $202m to sales. But the company's Q1 numbers also show that a recent drop in "paid clicks" did not hurt business like so many expected it would..

In recent months, market researcher comScore issued multiple reports showing the number of people clicking on Google ads didn't grow as quickly as it has in the past. That, combined with a slackening US economy, caused some people to think that Google's streak was over. Google's recent stock slide wiped out more than $75bn in market value.

But it would appear Google's phenomenal growth machine hasn't run out of gas quite yet. The company claims that the dip in paid clicks was part of an effort to improve ad relevance and increase revenue for advertisers. ®