Google's revenue and profits grew in the fourth quarter, which ended Dec. 31, 2009, and exceeded Wall Street's expectations, capping a year in which the search company did well despite the global economic turmoil.
Google had revenue of $6.67 billion, up 17% compared to the fourth quarter of 2008. Subtracting the commissions Google pays to its ad-network partners, revenue was $4.95 billion, topping the $4.92 billion analyst consensus expectation.
Net income came in at $1.97 billion, or $6.13 per share, compared to $382 million, or $1.21 per share, in the same period last year. On a pro forma basis, which excludes certain one-time items, net income was $2.19 billion, or $6.79 per share, compared to $1.62 billion, or $5.10 per share, in the fourth quarter of 2008. Analyst consensus had been for earnings per share of $6.50 on a pro forma basis.
Google CEO Eric Schmidt expressed satisfaction with the results after what he called “a roller-coaster year,” referring to the world's economic crisis. “This was a very strong quarter for Google,” he said during a conference call.
He credited the company's business model and staff, specifically the management, product and engineering teams, for the success.
Google, which makes most of its money from search advertising, will see significant revenue boosts this year from its emerging mobile, enterprise and display advertising businesses, Schmidt predicted.
The company is likely to acquire one company per month to boost its technology development efforts and beef up its staff, he said.
“We're very pleased with the Q4 results and that gives us the confidence to turn our focus to the growth opportunities,” said Chief Financial Officer Patrick Pichette.
Asked about the Chinese hack against Google and the company's plan to possibly exit China, Schmidt said Google is in conversations with the Chinese government and expressed hope that Google can remain in the country.
“We wish to remain in China. We like the Chinese people, we like our Chinese employees, we like the business opportunities there,” Schmidt said. “We'd like to do that on somewhat different terms than we have, but we remain quite committed to being there.”
For the moment, Google continues to censor its search results in China, but that could change soon, he said. As a result of the China-originated hack against Google servers, Google said last week it plans to stop censoring search results in the country, even if it means shutting down its business there.
In display advertising, where Google remains a minor player, Schmidt predicted big advances this year, and reiterated that “the next huge business for us is display” and that YouTube is an essential part of that strategy.
Schmidt also predicted significant increases in mobile revenue and praised the opportunities in the enterprise market, thanks to what he perceives as continued acceptance by businesses of the cloud computing model.
Google-owned sites generated 66% of the total revenue, while ad-network partner sites generated the rest.
Paid clicks, which are ads on which users clicked, thus generating a fee for Google, increased 13% compared with 2008's fourth quarter. The average value of clicks rose 5%.
Google ended 2009 with $24.5 billion in cash, cash equivalents and short-term marketable securities, and a staff of 19,835 full-time employees, 170 more than in 2009's third quarter.