Google (Nasdaq:GOOG) beat analysts expectations by a hefty amount for the quarter, and the stock surged on the news the economic slowdown wasn't having an impact on the search giant. In after-hours trading the stock was up by 17 percent on the news.
For the first quarter, income increased by 30 percent to reach $1.31 billion. After one-time charges, Google said earnings reached $1.54 billion, or $4.84 a share, soundly beating the $4.52 cents a share analysts expected.
Overall revenue for the quarter grew by 42 percent, rising to $5.2 billion. After paying their partners, revenue ended at $3.7 billion.
Paid clicks for the quarter, contrary to a report from comScore, grew by 4 percent from the last quarter, and were up 20 percent over a year ago.
While that's down from past growth, Google maintains the reason is changing they're making to bring their advertising base to a higher quality by eliminating lower quality advertisers, as well as fraudalent ones. That's the reason there are less ad clicks the company asserted.
At the same time, Google said revenue per click is increasing as a result of their quality initiative.
"We are working to improve the quality of search with better algorithms," said Google's chief executive Eric Schmidt on a conference call with analysts and investors. "Fewer but better quality ads ... will lead to people spending more and more time online."
This also seems to confirm that the concerns whether the migration of ad dollars to the Internet will be able to overcome the slowing economy are unfounded. The move to the Internet should continue to keep the ad model on the Internet strong for several years, regardless of the condition of the economy.
It looks like the move of ad dollars to the Internet is far stronger than the decline of the economy. That's what online marketers were hoping to hear, and what was expected by many. Google is a bellwhether in this ad category, and we need to take it as such.
We of course still need to watch things closely, but the Google results seem to show us the Interent advertising space should be strong in spite of the overall tough economic conditions.
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