Google quarterly sales surge past $2bn mark for first time

THE internet giant Google yesterday reported that its first-quarter revenue had soared past $2 billion for the first time in its seven years.

The company’s introduction of new products such as a finance website helped it to win market share from its rivals Microsoft and Yahoo in internet advertising.

The rise in searches helped to offset Google’s increased expenditure on marketing, new staff and offices.

Martin Pyykkonen, an analyst at Hoefer & Arnett, said: “They’re spending heftily on marketing expenses, but strategically it’s the right thing to do and the underlying reason why revenue growth was so strong.”

The company said that net profit excluding special items rose to $592 million (£330 million), or $2.29 a share, from $372 million, or $1.98 a share, a year earlier. Sales surged 79 per cent to $2.25 billion. This outstripped Wall Street forecasts for growth of 63 to 78 per cent.

Eric Schmidt, chief executive, said: “Google had an exceptional quarter with strong growth and profitability.”

Google shares jumped as much as 4.9 per cent in after-hours trading to $435.51.

The results will help to allay concerns about the company’s health that date from the fourth quarter of 2005, when it missed analysts’ forecasts for the first time. The disappointing results sent Google shares tumbling, wiping $19 billion from its market value.

The company has since experienced a host of problems that have prompted investors to erase a quarter of its market value from its peak at $475 in mid-January.

Google shares slumped in February after George Reyes, the chief financial officer, surprised investors by warning them that growth was slowing.

Soon after, the company accidentally released internal profit targets at a presentation for analysts. Embarrassed, Google admitted in a filing with the US Securities and Exchange Commission that the figures were a year old, prompting investors to send its shares lower. The shares recovered when Google joined the benchmark Standard & Poor’s 500 Index.

Google has also fought bad publicity for bowing to pressure from the Chinese Government to censor its content, in defiance of the company’s so-called motto, “Don’t be evil”.

Sergey Brin and Larry Page, Google’s founders, had claimed in their listing prospectus that the company would encourage its employees to do good.

Analysts estimate Google controls more than 60 per cent of the internet search market. According to AC Nielsen, 49 per cent of US searches are conducted on Google

GOOGLE’S UPS AND DOWNS

February 1: Google’s fourth-quarter earnings miss analysts’ forecasts. The company blames weakness in the UK market and a higher than expected tax bill. Shares tumble 7 per cent

February 13: Google shares slide after US magazine Barron’s says that they may be overpriced

February 16: Google hauled before a congressional committee over self-censorship of its China website. Congressmen accuse Google, Yahoo! and other companies of “sickening and evil” collaboration with the Chinese Government.

February 28: CFO George Reyes tells investors that advert revenue growth will slow. Shares fall as much as 13 per cent

March 7: Shares slide further after Google admits to US regulators that its finance staff inadvertently disclosed confidential revenue targets to analysts