Google posts solid Q3 results

Execs vow to contain costs in light of global economic crisis

Google posted revenue growth and healthy profit margins for the third quarter, but executives warned about threats to its online search and advertising businesses from the global economic downturn.

On Thursday, Google reported revenue of $5.54 billion for the quarter ended Sept. 30, an increase of 31% over last year. Google's net income was $1.35 billion, compared with $1 billion for the third quarter of 2007.

"We had a good third quarter with strong traffic and revenue growth across all of our major geographies thanks to the underlying strength of our core search and ads business. The measurability and ROI of search-based advertising remain key assets for Google," said Eric Schmidt, CEO of Google, in a statement. "While we are realistic about the poor state of the global economy, we will continue to manage Google for the long term, driving improvements to search and ads, while also investing in future growth areas such as enterprise, mobile and display."

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Google posted revenue growth and healthy profit margins for the third quarter, but executives warned about threats to its online search and advertising businesses from the global economic downturn.

On Thursday, Google reported revenue of $5.54 billion for the quarter ended Sept. 30, an increase of 31% over last year. Google's net income was $1.35 billion, compared with $1 billion for the third quarter of 2007.

"We had a good third quarter with strong traffic and revenue growth across all of our major geographies thanks to the underlying strength of our core search and ads business. The measurability and ROI of search-based advertising remain key assets for Google," said Eric Schmidt, CEO of Google, in a statement. "While we are realistic about the poor state of the global economy, we will continue to manage Google for the long term, driving improvements to search and ads, while also investing in future growth areas such as enterprise, mobile and display."

In a conference call with investors, Google executives vowed to keep a tight focus on operational efficiency and cost-containment in response to the shaky economic situation.

"It's pretty clear that the economy is worse than it was predicted to be just a month ago," Schmidt said. "What started off as just a financial crisis appears to be affecting the wider economy. The economic situation is so fluid that we are all in uncharted territory. . . . We're going to keep a close eye on costs based on everything we read in the papers because it's the right thing to do."

Schmidt said that while Google is realistic about the macro-economic climate, he remains optimistic about Google's future. In particular, he said that in a slow economy consumers will turn to Google's search features to do comparison shopping online, and he predicted companies will increase their investments in targeted marketing online.

Google co-founder Sergey Brin said he was optimistic about the potential for growth in Google's Android phones, which are being sold by T-Mobile. He also mentioned an uptick in the use of Google Apps by corporations and universities, and he remains bullish about online video and mapping.

"Our core business continues to demonstrate strength despite the challenging economy," said Google CFO Patrick Pichette. He added that "with great uncertainty also comes tremendous opportunity."

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