In the history of Google, they see their quarterly profits down for the first time, although the Big Daddy of internet search has been countering the recession in a much better way than predicted by analysts. Google still continues to efficiently implement its free-spending ways to generate the maximum of the company’s revenue through the online advertisements. This was reflected on the fourth quarter results, which contrasted the prediction of a possible lay-off as done by Google’s arch rival the Microsoft Corp which laid off 5000 employees.
However, the effects of the ongoing 13 month recession reflected on the Mountain-view based Google. This was clearly evident when they wrote their investments down to USD 1.1 billion compared to 1.5 billion which has been invested the trouble struck AOL and Clearwire Corp. Google has been provided an option for its 20,222 employees to acquire new stocks by swapping their existing stocks. This move will carry a lower price on the stocks and provide the staff with a brighter option to accumulate more wealth from the new stocks. A drop in Google’s stock prices by 47% initiated the move by Google as existing 17000 staff holding the stocks will be suffering a huge loss if they cash in their stocks.
Eric Schmidt, Google Chief Executive, stated that the upcoming months will be more challenging and daunting due to economic downturn worldwide. He addressed his employees and infused confidence that Google is prepared to face such challenges and hopes that the period recession to be short.
Google accumulated USD 382 million in the period September ’08 to December ’08, which is a 68% decline compared to the same period ’07. On a YoY basis Google’s profit has been up by 17% for the preceding 17 quarters. Google stated that they would have seen their stock prices standing above average at $5.10/share (average being $4.95/share) if they could have avoided compensation costs to employees holding stocks and dismal investments made.
Revenue was seen at USD 5.8 billion, an 18% growth, which is less than a 30% growth experienced in the previous year.
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