Google profit up amid slowing ad sales

July 16, 2009 9:05:39 PM PDT
Silicon Valley giant Google let the world know Thursday that it is holding its own in this recession and still making money, albeit at a slower pace.

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Google's Mountain View campus is full of color and energy. CEO Eric Schmidt tried to bring that same upbeat outlook to the company webcast about second-quarter earnings.

"At Google we've had a very good quarter; one that demonstrates our resilience in what continues to be a very difficult environment," said Schmidt. "Three percent year-over-year growth."

Google makes most of its money through online advertising. Those paid clicks grew 15 percent from a year ago, but were down 2 percent from the first quarter. Total second-quarter revenue was $5.5 billion.

Karsten Weide is a technology analyst at IDC's San Mateo office. He sees the earnings news as a clear sign of an overall stabilization.

"The steepness of the decline is leveling off, so we think that's a very good indicator of Google and the industry at large," said Weide. "They hit rock bottom now and from there things can only get better."

We do know Google's future includes a fierce and escalating battle with Microsoft. Both companies are aggressively taking on each other's traditional turf.

Microsoft launched Bing to compete with Google's dominant search engine. Bing has many familiar Google features, such as images, news and maps. Now Google is challenging Microsoft's dominance in the software arena with the introduction next year of Chrome OS as an alternative to Windows.

"What Google is hoping to do with Chrome OS is just establish a bigger footprint on personal computing in general and just to have a bigger influence on what people do with their computers," said John Letzig, a technology reporter at MarketWatch who closely follows both companies and the rivalry.

Microsoft reports its second-quarter results in one week.

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