Google Hits Ceiling, Q1 Revenue Growth Slows Down

The ongoing recession in the global economy has taken its toll on almost every industry and even Google is not untouched by the recessionary trend, with the search engine biggie posting its first revenue drop in consecutive quarters since last five years.

Although Google’s revenues for the first quarter that ended on 31 March rose by 6 percent to $5.51 billion from $5.19 billion registered for the same period a year ago; however its revenues actually dipped by 3 percent when compared with the last quarter of 2008.

The search company trimmed down its expenses and cut jobs to beat the shaky advertising market during the period, thereby helping quarterly profits to grow by 8.9 percent to $1.42 billion, or $4.49 per share, from $1.31 billion, $4.12 per share, posted for the same period a year ago.

The effective revenues for the company, after subtracting fees and commissions paid to advertising and distribution partners, were found to be $4.07 billion.

Discussing financial results for the first quarter, Google chief exec Eric Schmidt said he was quite satisfied with the quarterly performance of the company, particularly amid global economic slowdown, and attributed the revenue growth to rise in search queries.

“The first quarter demonstrated the resilience of our business model in a very severe global recession. We're going to continue to invest for the long term as we should and as we will”, Schmidt added.

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Our Comments

What does that mean for Google? Growth will become more difficult as its size grows unless it starts looking at other markets like mobile telephony, Software as a service, social networking etc. Incidentally, Google already has fingers in all these pies and like spread-betting, it is only a matter of time before one of them (or more) changes to the golden goose.

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