Stephen Logan

Despite Spending Big, Google Posts Huge Q2 Profits

15th Jul 2011 News, Industry News 1 minute to read

If you’ve ever wondered how much a search engine empire is worth, the answer is around $2.5billion each quarter. That’s not just income either, that’s net profit.

This is despite hiring 2,542 new staff and investing heavily in new technology/projects (including Google+ of course). No doubt a 12% increase in the amount advertisers are paying for clicks has helped. But with the overall revenue of the company reaching $9billion during the quarter, rising by over a third (36%) compared with the same period last year, it looks like it’s all looking rather rosy for new Chief Executive Larry Page [Source: This is Money | Google sees shares bounce after profit surge bolsters Larry Page in top job].

If you’re a shareholder in Google, this good news is no doubt sweetened further by the 12% surge in stock valuation. It’s certainly a remarkable story, particularly in this time of global austerity, that a company that essentially sells nothing of any physical value or substance can generate more than most countries.

However, that might provide scant reward for AdWords PPC users and display advertisers who have seen costs rise in the last 12 months. This of course is the prerogative of Google, who are effectively able to control the spend of millions of advertisers across the globe based on their market dominance. Indignant boycotting of Paid Search would simply have no effect, therefore the 12% increase is just something that has to be swallowed. Critics of course would point to this being one of the by-products of a monopoly.

Major outlays on new technology, such as the $400 million purchase of Admeld, ongoing social projects and continuing brushes with the regulators, could dent future profits; but so far this year it appears to be having little impact on the company’s bottom line.

In fact the figures even outstrip the expectations of most investment experts, with predictions of a 28% uplift widely anticipated yesterday. The news might not be so good for rivals though. Next week Yahoo will be releasing their highly anticipated quarterly results, which should finally shed some light on the ongoing Alibaba saga. This will certainly be well worth watching out for and I would imagine that these record figures from Google are going to bring very little cheer to the faces of Carol Bartz and her Yahoo team.

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