Big 4Q Earnings Pop for Google

Google Inc. revved up its fourth-quarter Internet advertising sales to approach $2 billion in quarterly profit for the first time, providing the strongest sign yet that Internet search leader has shaken off the recession's doldrums.

The results announced Thursday topped analyst estimates, but evidently weren't enough to please investors. Google shares dived more than 4 percent in extended trading.

Google earned $1.97 billion, or $6.13 per share, in the final three months of 2009. That was up dramatically from income of $382 million at the same time last year, when Google's earnings were deflated by charges to reflect the eroding value of some investments.

Fourth-quarter revenue totaled $6.7 billion, a 17 percent increase.

Google's revenue growth had bogged down to just 5 percent through the first nine months of 2009. The company's quarterly growth had never fallen below 10 percent until last year.

"Given that the global economy is still in the early days of recovery, this was an extraordinary end to the year," said Eric Schmidt, Google's chief executive.

The performance is likely to give people something to talk about other than Google's threat to shut down its China-based search engine and perhaps pull out of the world's most populous country in a dispute over censorship and computer security. Google didn't address its uncertain future in China in its earnings release but the subject was expected to come up during an analyst conference call.

Investors had been expecting big things from Google, largely because management had already signaled its belief that the worst of the recession was over. Google had clamped down on spending to offset its decelerating revenue growth, but the company said in October that it felt confident enough to begin hiring more workers and making more acquisitions.

The fourth quarter also is usually Google's most prosperous time of the year because advertisers tend to spend more during the holiday shopping season while consumers conduct more searches for merchandise and deals.

Google's strong showing suggests the online advertising market is regaining its vigor after losing steam through most of 2009. But Google isn't widely seen as a bellwether for the entire Internet ad market because its dominance of online search has put it so far ahead of the rest of the pack. One of those rivals, Yahoo Inc., is expected to report a drop in fourth-quarter revenue when it releases its results Tuesday.