While the company recorded its first sequential drop in quarterly revenue since going public in 2004, Google managed through a combination of tighter cost control and increasing market share to outpace its ad-supported rivals and boost its profit during the recession.
Google’s profit rose almost 9 percent, to $1.42 billion, from the same period a year ago. Total revenue was $5.51 billion, just 6 percent above the first quarter of 2008. Google’s shares were up slightly in morning trading on the Nasdaq.
The longer-term outlook for the search giant remains uncertain. Declining as usual to provide detailed financial forecasts, Schmidt said in a conference call that the economy is “in uncharted territory” and Google’s performance is “absolutely” affected by the dismal macroeconomic conditions.
Many analysts believe that Google is facing a longer-term slowdown in its own meteoric growth, even once the recession begins to turn around. While the company has increased its lead in the U.S. search market, overall, people are searching less in the recession and companies are spending less on online ad words. After rapid growth the last few years, overall online advertising is expected to rise by only a few percentage points in 2009. As its core business slows, Google is trying to find more revenue sources by placing ads for the first time, for example, on popular Web services like Google News, Image Search, and the company’s business-and-finance portal.
Investors are also looking for clues to the plans for Google’s recent acquisitions – in particular the wildly popular, but still unprofitable, YouTube. Schmidt said the video sharing giant is “making very good progress” in starting to make money by lining up deals with other content providers and media companies.