Google shrugs off slowing economy

The online search engine Google defied economic worries, with a 26% rise in profits, sending its shares soaring 7% in after-hours trading.

Google earned $1.35bn (£778m) in the third quarter of 2008, easily beating analysts' expectations.

The firm said its earnings had grown strongly thanks to its core online search and advertising businesses.

Google's quarterly revenue, including commissions to affiliated advertisers, rose 31% to $5.54bn.

Announcing its results, which came after Wall Street had closed, Google said it would continue to improve its core businesses, and would also invest in future areas of growth.

"While we are realistic about the poor state of the global economy, we will continue to manage Google for the long-term"
Eric Schmidt, Google chief executive

Analysts welcomed the figures. Colin Gillis of Canaccord Adams said: "It's the power of the model - paid search is the best form of media advertising out there."

Cheaper technology

"Even in a down market, advertisers are going to be seeking customers. These results separate out Google from the eBays and the Yahoos," he added.

Greg Woodard of Manning & Napier in New York, said that Google would remain a dominant player.

"While it won't be immune from the economic downturn, at the same time Yahoo, its biggest competitor, is struggling. I think they'll emerge strong," he said.

Chief executive Eric Schmidt accepted that even Google, which is the internet's most profitable company, might not be immune to the fallout from the financial crisis.

"While we are realistic about the poor state of the global economy, we will continue to manage Google for the long term."

Google managers have said the search engine will thrive despite the slowing economy, because its technology can find customers more cheaply than marketing.

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