Earnings: Google Beats Expectations; Net Revenues Up 10 Percent

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Earnings: Google Beats Expectations; Net Revenues Up 10 Percent

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Google (NSDQ: GOOG) has surprised naysayers again with stronger-than-expected quarterly results, despite overall weakness in the search-advertising market.

The company posted net income of $1.42 billion ($5.16 per share), up 8 percent from the $1.31 billion ($4.84 per share) recorded during the same period a year ago. Revenue for the quarter increased 10 percent to $4.07 billion, from $3.7 billion, excluding traffic acquisition costs. On average, analysts had expected earnings per share of $4.93 and revenue of $4.08 billion, according to Yahoo (NSDQ: YHOO) Finance. “These results underline both the resilience of our business model and the ongoing potential of the web as users and advertisers shift online,” said Google CEO Eric Schmidt in a statement. “Going forward, our priority remains investing for the long term to drive future growth in our core and emerging businesses.”

As expected, for the first time in the Google’s history, net revenue actually declined quarter to quarter. The company posted revenue of $4.22 billion during the fourth quarter of 2008. But earnings per share were up from $5.10.

The company also announced that sales chief Omid Kordestani would step aside to take on a new role as senior advisor to the office of the CEO and the founders. Nikesh Arora, who has been the president of international operations, will be replacing him.

Earnings release | Slides | Webcast (4:30 PM ET)

Some highlights after the jump:

—Paid click growth: Paid clicks increased 17 percent, exceeding analysts’ estimates of a 13 percent increase.

—Google sites revenues: Revenues increased 9 percent compared to a year ago, although they were down 3 percent from the fourth quarter of 2008. During the quarter, Google introduced ads to some of its sites that did not previously have them, including Google News.

—Networks revenues: Revenue generated via Google’s AdSense program fell 3 percent compared to the first quarter of 2008 and 3 percent compared to last quarter.

—International Revenues: International revenues accounted for 52 percent of the company’s revenue. The company said that if foreign exchange rates had stayed the same revenue would have grown by $429 million compared to a year ago. In the United Kingdom, the company’s revenue grew due to a program designed to manage foreign exchange fluctuations.

—Employment: Google’s employment fell for the first time in its history, as the company slowed hiring and laid off employees in sales and marketing, radio ads, as well as recruiters. The company had 20,164 employees, down from 20,222 as of Dec. 31.

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By Joseph Tartakoff