Google beats recession

                        

              This Thursday anyone who is looking for the sings that the recession is over could've found them in Google's recent profit report.




The company announced a net profit of $ 1.64 billion for the Q3, which is a 27% increase compared to the same period last year. Total revenue reached $ 5.94 billion, up to 7% of last year's figures and over three times the predicted sum of $ 1.29 billion. Moreover, this is the slowestfastest growth pace since the company went public, states the Associated Press article.

Eric Schmidt, who hit the headlines this year when it was revealed he was a member of both the Apple and Google boards, believes that the financial fortunes of the global economy are changing: "The worst of the recession is clearly behind us, and because of what we have seen, we now have the confidence to be optimistic about our future". These words inspired the investors, and the company's shares rose 3.1% to  $ 546.35 (still below the peak of $ 750 in 2007, but well above its 52-week low of $247.30).

Analysts predicted Google to be on of the very first companies to witness the economic downturn changing as businesses put their faith in Google for advertising. It is well noticed in the CNN Money article that "when economic times are tough, people don't stop searching for things online, they just search for different things". Perhaps, that's the reason Google is doing much better than its insignificant competitors - Yahoo! and Bing.

Actually, Yahoo! managed to report increase in profits and sales only due to extensive cost cutting of firing 2000 employees. And the Microsoft's Bing is now too small to rival the giant empire of Google. Though i'm not sure Bing will really do well in future, as it keeps to the "too-smart" practice of all Microsoft products (the search engine tries to give you as few sites as possible, though they should be almost 100% agree to the thing you've been looking for).

Google's obvious advantage hides in its very convenient business model. The company develops and sales everything itself (67% of earnings are gained from Google's own sites). The expenses endured are mainly on staff and technology development and innovation. If we fire some employees and don't build new data-centres, it leads to noticeable multiplier effect on margin. The time will show how long lasting this model is.

Anyway, Google is in very good position in the market. After introducing the AdSense service to blogs (such as Livejournal.com and Blogger.com), the company aims for new acquisitions to develop such services as online book-selling and gmail, to improve Chrome OS and to come to smartphones market with its Android mobile OS.

1 comments:

Helena said...

6/10

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