Google still taking over the world

So much for the online advertising slowdown. Google's revenues were up 42% last quarter...

Last Updated: 31 Aug 2010

The pockets of Google founders Sergey Brin and Larry Page will be feeling a bit fatter this morning, after another huge jump in profits sent the search giant’s share price soaring again. Google said that its profits surged 30% to $1.3bn in the first quarter of this year, with revenues up 42% to $5.2bn. Both figures were well above expectations, despite gloomy Wall Street predictions that a slowdown in online advertising would take a big bite out of the figures. As one hilariously non-PC analyst told the BBC: ‘The boys delivered’. And not for the first time...

Like eBay earlier this week, Google’s been cashing in from the growth of its overseas business, coupled with the weakness of the US dollar. The search giant has been building its overseas business furiously, not least here in the UK where it seems to have hired half of London – and this advertising spend goes much further when it’s converted back into dollars. As a result, Google actually made more money overseas than it did in the US for the first time ever last quarter. The UK alone contributed revenues of more than £400m – something for us all to be proud of, we’re sure you’ll agree.

The quarterly results sent Google’s share price rocketing again during after-hours trading last night – the 17% jump gives the company a theoretical value of about $120bn, which isn’t bad for a company that only made about $10bn in revenue last year (using ‘only’ in the loosest sense of the world, of course). And it’s actually dropped quite some considerable way since last November, when it was valued at an extraordinary $170bn.

Google results day is always fun, because the company appears to operate on completely different set of rules from everyone else on Wall Street. Analysts have become so used to it smashing forecasts that double-digit growth comes as a crushing disappointment. Back in January, its share price slid because it ‘only’ managed 52% revenue growth. We’re guessing a few other companies wish they had that kind of problem at the moment.

One man who probably won’t be too pleased by these latest figures is Microsoft supremo Bill Gates, who now faces the prospect of paying a bit more to get his hands on Yahoo. If there had been an advertising slowdown, he could have argued that Yahoo was wrong to hold out for more money. But with Google ploughing ever further into the distance, Gates is left with a double whammy – the advertising money is clearly still flowing, and the need to rein Google in just got a bit more urgent. He needs to act fast or Google will start eating his lunch as well as his breakfast...

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