Google profits up 30%, quashing fears of online ad slowdown

Fri Apr 18 2008, 09:25 AM

Google says net income rose 30% to USD1.31bn in the first quarter this year, soothing market fears of an online advertising slump sparked by past analyst reports. The company reported revenues of USD5.19bn in the quarter, a 42% year-on-year increase and a 7% growth from Q4 2007.

For the first time, overseas sales accounted for just about half of revenues, with Google blaming a slump in the value of the dollar for driving down US income. Google CEO Eric Schmidt said: "Our ongoing innovation in search, ads and apps helped drive healthy growth globally across our product lines."

Google re-iterated the drop in the value of its paid-click search ads, which fell by more than 20% from the year before. The search giant blamed the slump on a restructuring of its advertising systems, aimed at minimising the number of accidental clicks and reducing low-quality advertising.

Google says better quality advertising will help its revenue growth remain positive in the sector. It claims the projected US economic downturn is not reflected in consumer activities as yet, predicting that users will respond favourably to its improved ad service.

Company shares dropped 1.2% to USD449.50 prior to the announcement, but rebounded by 17% to USD526-a-share following the report.