Google Inc.’s profit slipped for the first time in the fourth quarter, but the Internet search leader was still able to deliver a performance that was better than analysts anticipated.
The results released Thursday indicated the Mountain View, Calif.-based company was able to rein in its free-spending ways enough to offset a slowdown in the online ad market that generates most of Google’s revenue. That contrasted with a missed forecast and 5,000 layoffs announced earlier in the day by rival Microsoft Corp.
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Even so, there were signs the recession is starting to bear down on Google.
The downturn forced Google to write down most of the $1.5 billion that it has invested in two other struggling companies, AOL and Clearwire Corp. And Google is allowing its 20,222 employees to swap their outstanding stock options for new ones that will carry a lower exercise price — which means the workers will have a better chance of making money from the options. The move was driven by the sharp drop in Google’s stock price over the past year.
Google made $382 million, or $1.21 per share, in the three months ending in December. That was a 68 percent drop from the same period in 2007. The company’s profit had climbed by at least 17 percent in its previous 17 quarters.
If not for employee stock compensation costs and the charges on its deteriorating investments, Google said it would have made $5.10 per share. That beat the average estimate of $4.95 per share among analysts polled by Thomson Reuters.
Revenue climbed 18 percent to $5.7 billion. That marked the first time Google’s revenue growth had fallen below 30 percent from the previous year.
After subtracting commissions paid to its ad partners, Google’s revenue stood at $4.22 billion — about $100 million above analyst estimates.
“Our business is quite healthy, especially given the economic climate,” Google Chairman Eric Schmidt told analysts in a Thursday conference call.
Google shares ticked up $6.39, or 2.1 percent, in extended trading after finishing the regular session at $306.50.