Google revenues climb despite economic woes

NEW YORK - Google has impressed US analysts with an 18% year-on-year rise in revenues in the fourth quarter, though profits were hit by an accounting charge and UK revenues fell in dollar terms.

Fourth quarter revenues came in at $5.7bn (£4.2bn), which was up 3% on the third quarter.

However, fourth quarter net profits fell 68% to £382m as a result of a $1.09bn writedown of the value of investments in AOL and wireless internet provider Clearwire.

Analysts were upbeat about the company's performance amid the worsening economy, but there are expectations that its first quarter results will be worse.

Eric Schmidt, chief executive of the search giant, fed these expectations by describing the fourth quarter as "the easy part" and calling the next few months "uncharted territory".

Google has already taken a hit from its UK operation, according to the limited financial information it supplied in its results.

Last week, Google said it planned to lay off 100 of its recruitment staff and close three engineering offices as it contended with the weakening US economy.

It showed that revenues have dropped by 12% from $776m in the third quarter to $685m in the fourth quarter; they are also down from $692m in the fourth quarter of 2007.

It is likely that the pound's decline against the dollar accounted for most of the drop, but this is speculation as no sterling-based UK revenue figures were supplied.

Google indicated its total non-US fourth quarter revenues ($2.86bn) were unfavourably affected by exchange rates, saying they would have been $334m higher compared with the third quarter if exchange rates had remained constant.

The company revealed it has restructured its stock options scheme because the dramatic fall in its share price has left many employees holding options that cannot be exercised. It will allow employees to exchange their current options for options equal to its closing share price on March 2.

Earlier this week Google said it was abandoning its two-year-old Google Print Ads service venture with US newspapers after it failed to deliver the desired returns.

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