Search giant Google weighed in with impressive first-quarter earnings. The company reported adjusted earnings per share of $5.16 cents, solidly beating analyst estimates of $4.93 per share.
"It was a good quarter. Revenues were in line with the street consensus and EPS beat,” Jason Avilio, an analyst with Kaufman Bros., told Reuters. "Economically speaking, I think Q1 is the most challenging quarter, so the momentum should continue for the rest of the year."
It's official now: Even Google can't escape the recession. With its first-quarter results on Apr. 16, the leader in Web search revealed its first quarter-on-quarter decline in sales, reflecting cutbacks in online ad spending. Thanks to cost cutting, Google (GOOG) handily beat profit expectations, but it offered no assurance that overall business conditions would turn around anytime soon.
Google's revenue, almost all of which comes from advertisements placed next to related search results, rose 6% from a year earlier but slipped 3% from the fourth quarter. Sales, after subtracting commissions to Web site partners, were $4.07 billion. That's about what analysts, who have been reducing their estimates in recent weeks, had expected.
Investors initially liked what they saw, boosting the stock almost 6% in extended trading after the figures were released. After all, Google's slowdown looks good compared with the larger advertising market, which is expected to fall at least 5% this year. But as it became apparent that Google's underlying business was feeling the effects of the recession, shares reversed course and gained only a fraction of 1%. "The quarter confirms that Google is suffering from the economic slowdown," says Sandeep Aggarwal, analyst at financial-services firm Collins Stewart.
Disclosure I do not own goog shares at this time.