While investors still see tough times ahead for the search Giant, Google still showed better-than-expected fourth-quarter results led by its search business.
Google rose 4% in Friday trading, after disclosing late Thursday that net revenue (excluding what it pays to distribution partners) rose 24.5% to $4.22 billion. Lower payments to partners resulted in higher earnings per share of $5.10.
Bernstein analyst Jeff Lindsay points out, however, that the real story is in Google's search business.
Here's what Lindsay wrote in his research report:
Google's paid-search model continues to show a high degree of recession resistance. Unlike display advertising - which we think has been negatively impacted by the current economic downturn - paid search still seems to be attracting advertisers. Google reported paid clicks had grown by 18% annually, compared to total advertising growth of 16%, which would suggest that cost-per-click rates had fallen on average by approximately -2%. Adjusting for currency headwinds, total revenue actually grew by 21%, implying a rise in cost-per-clicks.
Overall, this was an impressive quarter and confirmed that paid search has become the advertising platform of last resort for many advertisers.
