April 17, 2009
Google Sees Higher Profits from Lower Revenues in Q1-09
Google Inc. reported an 8% increase in profits over the same period last year while also reporting slightly lower revenues. Aggressive cost cutting and cost management were cited as the reason Google was able to pull more profit from less actual revenues. The Q1-09 financial report marks the first time Google has reported lower revenues since going public in August 2004. Google's net income for the quarter ending March 31 2009 was $1.42billion. In a conference call with investors, Google CEO Eric Schmidt said, "No company is recession proof. Google is absolutely feeling the impact. Users are still searching but they are buying less." To be clear about the numbers, Google did not lose any money in 2009. In fact, Google's revenues grew by 6% over the same period in 2008. That growth however appears stunted against the meteoric 42% growth seen in Q1-08 over Q1-07 or the 63% growth reported in Q1-07 over Q1-06. In other words, the period of mega-growth and mega-spending has, for the time being, ended. That end is best reflected in Google's moves to cut costs across the board. Q1-09 also marks the first time Google's employee headcount has declined in the company's history. Google ended 2008 with 52 less employees than it opened the year with. By contrast, Google hired over 2100 employees in Q4-07. When asked about a potential purchase of Twitter, Eric Schmidt suggested Google is interested but also stated that the search giant is interested in advertising opportunities across a number of other real-time communications technologies.