Google, which weathered the economic downturn better than most companies, reported strong fourth quarter earnings today, beating analysts expectations. (Statement)
For the fourth quarter, Google reported profits of $1.97 billion on revenue of $6.67 billion. Including traffic acquisition costs, the revenue tally was $4.95 billion. Excluding items, the company reported earnings of $6.79 per share.
Wall Street was expecting earnings of $6.48 per share on revenue of $4.9 billion.
In a statement, CEO Eric Schmidt said:
Given that the global economy is still in the early days of recovery, this was an extraordinary end to the year. Our performance in 2009 underscored the strength of our management team, the resilience of our business model and the pace of innovation within our product and engineering teams, which continued unabated throughout the downturn. As we enter 2010, we remain hugely optimistic about the internet and are continuing to invest heavily in technological innovation for the benefit not only of our users and customers, but also the wider web.
During a call with analysts, Schmidt offered some hints at road map for 2010, declaring that the company is "back in business full blast."
He noted that the company would continue to invest, first in people, second in technological innovation and finally in acquisitions. The company has about 20,000 employees now and it will continue to "aggressively hire," particularly in engineering and sales. He said the company has been on a pace of about one acquisition per month and that it will likely stay on that pace - some big and some small. In some cases, the company is also interested in acquiring talent via acquisitions.
Looking ahead, the company talked about the importance of other areas of the business that are priorities, such as mobile and Chrome OS, as well as up-and-coming initiatives, including commerce and social.
In terms of social, the idea is more along the lines of customizing results that are based on location and social data. (Maybe a friend reviewed a restaurant near your location, which would be pushed up higher in the search results.) In addition, the company sees a bright future ahead for mobile, noting that the advancements in technology and devices gives the mobile web the potential to be better than the PC web.
The company didn't address China in its prepared statements but was asked about it during a Q&A session. The company shot to the top of headlines when it revealed last week that it had been targeted in a cyber attack that originated in China, said it would no longer comply with China's censorship rules and threatened to close it China operations.
Schmidt addressed a general question about China by saying that they're continuing talks with the Chinese government to reach an agreement that would allow them to continue to operate in China under different rules. For the moment, the company continues to comply with the country's laws and filters results but "in a reasonably short time from now, we will be making some changes there," Schmidt said.
The company was also asked about its relationships with Apple. There have been rumors in recent days about Apple talking to Microsoft about using Bing as the primary search engine for the iPhone. Schmidt addressed the question by saying that as a former Apple board member, he has a "special spot for Apple in my heart" and praised it for being a very well-run company with "a lot of good stuff coming." He said Apple and Google have good partnerships but are also competitors and that "my guess is that's pretty stable for some time."
Despite the financial performance for the quarter, shares of Google dipped in after-hours trading, down more than five percent. In regular trading, shares were up slightly, closing at $582.98.