Google increases revenue, profit and says economy is recovering

Schmidt hints that Google is ready to start an acquisition spree

If you are looking at Google as an indicator of overall economic health, you'll be happy to know the company had a good third quarter. It reported increased revenue and profit over its year-ago third-quarter, beating analysts estimates in the process. Google CEO Eric Schmidt even went so far as to say, "we believe the worst of the recession is behind us and now feel confident about investing heavily in our future."

When excluding the money it pays out to partner sites, revenue was $4.38 billion, compared with an estimate of $4.25 billion in a Bloomberg survey of analysts. Net income rose to $1.64 billion from $1.29 billion a year earlier, Bloomerg reports.

The sites owned by Google generated the lion's share of revenues, at  $3.96 billion, or 67% of total, in the third quarter of 2009. This represents an 8% increase over third quarter 2008 revenues of $3.67 billion, the company said. AdSense programs generated $1.80 billion, or 30% of total revenues, in the third quarter of 2009, a 7% hike over the year ago period. Revenue from paid clicks was up 4%. Meanwhile overall costs decreased. The average cost-per-click declined 6% over a year ago, and was down 5% over the previous quarter. Worth noting that in March, Google cut 200 jobs, about 1% of its workforce.

With costs under control and income on the rise, Google is ramping up for acquisitions. Schmidt said as much last month and his statement about investing heavily is yet another clue in the same direction.

But Google hasn't exactly kept its hands in its pockets during the recession. Its last acquisition was reCAPTCHA in September for an undisclosed sum. A month earlier it bought video compression vendor On2 Technologies for $106.5 million.

If Google is ready to spend for bigger game, who should Google buy next?

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Copyright © 2009 IDG Communications, Inc.

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