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Google’s 11-year growth spurt ends

17 апреля 2009

Google’s revenues in the first three months of this year fell below the preceding quarter for the first time in the company’s history as the global recession brought an end to its unprecedented 11-year growth spurt.

“No company is recession proof, Google is feeling the impact,” said Eric Schmidt, chief executive officer, although he added the latest figures showed that Google was still performing strongly at a difficult time.

Meanwhile, Google announced a redesign of YouTube that it said would add significantly to the video site’s appeal to professional studios. YouTube’s commercial growth has been held back by the lack of formal links with studios, since it only sells advertising against content covered by these types of arrangement. The new arrangements will see a new area added to its site displaying full-length TV shows and movies.

Google also revealed a second switch in the senior management of its sales operations, following the recent departure of Tim Armstrong to run rival AOL, although Mr Schmidt denied that the timing was influenced by recent performance or the effects of the recession.

Omid Kordestani, head of global salesforce operations and the first business manager hired in its early days, is to step aside from day-to-day operational management. Nikesh Arora, head of Google’s European business, was named as his replacement. Google said Mr Kordestani would continue in an advisory role.

While Wall Street generally assesses companies on their financial results compared with the same quarter a year before, high-growth companies such as Google are frequently judged on their sequential, quarter-to-quarter growth rates.

The search giant said revenues had slipped to $5.51bn in the three months to the end of March, 3 per cent lower than the final quarter of 2008, the first time that the company, which was renowned for its stellar growth, had ever suffered such a decline.

In spite of that, Google’s revenues were still 6 per cent higher than a year before, pointing to the greater resilience of its search engine business in the face of the recession than other forms of online advertising.

Mr Schmidt blamed the falling growth rate on the fact that internet users are clicking on adverts less frequently, while advertisers are offering to pay less per click. These are rational responses to the recession and suggest that Google’s fundamental business model is continuing to function as expected in the downturn, he added.

Источник: Financial Times

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