Google's quarterly profits rise 18% to $1.5bn

LONDON - Google's quarterly results are providing a sign that the online advertising industry has turned a corner, with an 18% increase in post-tax profits.

In its latest results, Google posted profits of $1.48bn (£901m) in the three months leading up to June, with revenues up 3% from the previous quarter to $5.52bn (£3.36bn).

Revenue growth was hampered by foreign currency fluctuations, which erased $373m from the company's earnings.

Yet, international revenues accounted for more than half of Google's cash flow, at $2.91bn, despite the fact that Google UK's dollar-based revenues were down 8% year-on-year, due to the collapse of the pound.

Eric Schmidt, Google CEO, said: "We're not at the moment looking at the downward spiral we thought we might be six months ago."

The company's inspiring quarterly figures can be attributed to a number of cost-saving measures it took while the recession began to dig in. By reducing its staff count by nearly 400, operating expenses were 4% lower than the same time last year.

Schmidt is even confident that its money-hungry video sharing site YouTube will begin to turn a profit this year, as the company convinces advertisers to market their products beside the increasing amount of professionally produced content uploaded to the site.

Schmidt said the company will remain focused on technical innovation to continue to drive growth. Its Q2 profits will be added to its significant war chest, which now stands at nearly $20bn.

Google has widely diversified its business model over the past year. It is no longer simply an ad-selling search engine, despite that fact that its AdSense programme accounts for a large majority of its revenues.

Last year, the company branched out into the mobile phone software market, teaming up with Taiwanese manufacturer HTC to launch the G1 handset - which has sold several million units, all running its open source Android software.

The company has been pushing its Google Voice product as of late, which allows users to consolidate all their phones into one number, transcribe voicemail into text documents -- and vice versa -- while offering free long distance calls and low international rates.

This month, Google announced plans to challenge Microsoft on its own turf, revealing plans for a desktop operating system based around its Chrome browser.

Dan Leahul recommends

Google

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