While most analysts predicted doom and gloom for Google's Q3 earnings call, especially in light of the stricken economy, Google dispelled the clouds with some fairly good numbers. Besides increasing revenue 31%, Google beat analysts' profit estimates, posting a 26% hike in net income, or $4.24 a share. The news, coupled with similarly postive numbers from AMD and IBM, shows that at least so far, the current downturn isn't making that big a hit on the tech sector. At least nothing to rival the dot-com bust.
An especially bright spot for analysts is Google's focus on cost control. The company reined in expenses and added just 500 employees, compared with 2,100 a year ago. In a New York Times article, Barclays Capital analyst Douglas Anmuth says the move will please the market:
“They are operating well in a tough environment. The key to the quarter is that they showed a real focus on cost controls and that’s what Wall Street needed to see.”
And the street rewarded Google, which saw its shares close up 4%, and at least another 8% in after-hours trading. And analysts are hoping Google's numbers can help soothe the overall market, which has been frenetically climbing and diving lately. Conde Naste's Portfolio.com sums it up this way:
All in all, this has got to help everybody calm down. If Google had taken a dive, no doubt panic about the Internet and its reliance on advertising models would have ensued. Google didn't knock it out of the park, but its business seems to be on reasonably solid footing.
So it's good news for Google--and the market in general.
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