Google reorted its first ever drop in quarterly profit. January 23rd 2009.
Google Inc. reported its first-ever drop in quarterly profit Thursday, but the Internet search leader is weathering the economic storm better than analysts anticipated.
The fourth-quarter results indicated Google was able to rein in its spending enough to offset a slowdown in the online ad market that generates most of Google’s revenue. That contrasted with a missed forecast and 5,000 layoffs announced earlier in the day by rival Microsoft Corp.
Even so, there were signs the recession is starting to bear down on Google.
Google was forced to write down $1.09 billion of the combined $1.5 billion that it has invested in two troubled companies, AOL and Clearwire Corp. And Google is allowing its 20,222 employees to swap their outstanding stock options for new ones that will carry a lower exercise price, giving the workers a better chance of making money from the options.
The move was driven by a 48 percent drop in Google’s stock price over the past year, leaving about 17,000 employees holding options that are “underwater” and can’t be cashed in now at a profit.
Although hailing Google’s strength in a weak economy, Chief Executive Eric Schmidt signaled the challenges are becoming more daunting, describing the fourth quarter as “the easy part” and calling coming months “uncharted territory.”
Google made $382.4 million, or $1.21 per share, in the quarter, down 68 percent from the year-earlier period. Google’s profit had climbed by at least 17 percent in its previous 17 quarters as a public company.
Revenue climbed 18 percent, to $5.7 billion. That marked the first time Google’s revenue growth had fallen below 30 percent from the previous year.
The results came after the close of regular stock market trading. Google shares declined in after-hours trading.
UnitedHealth Group Inc.: Shares of the health insurer jumped after it released a fourth-quarter report that showed signs it might be building momentum in a recession-battered industry.
The company said profit fell 40 percent compared with the year ago’s quarter. But adjusted earnings, which didn’t count a lawsuit settlement, matched analyst expectations.
That carries extra weight these days, said BMO Capital analyst Dave Shove.
“The world’s so crummy that not being bad is a positive,” he said.
Revenue rose 9 percent, to $20.45 billion, surpassing Wall Street expectations.
Shares rose $2.14, or 8.5 percent, to $27.19.