Now is the time for layoffs? Somebody forgot to tell Google (NASDAQ:GOOG).
"We are producing more relevant ads against more queries every time. Relevancy against commercial queries equals ROI, which equals revenue for Google," CEO Eric Schmidt told analysts in announcing fourth-quarter results yesterday.
Google, in other words, is focused on revenue and profits, and produced plenty of both in the fourth quarter. Revenue rose 18% overall and 22% for Google sites. Revenue from network sites -- those that run Google's AdSense ads -- was up 4%. Aggregate paid clicks rose 18%.
Analysts weren't expecting that sort of growth. Wall Street had called for $4.96 in per-share earnings after accounting for stock-based compensation. Google produced $5.10 a share instead, up 15% over last year's $4.43.
But those gains exclude $1.09 billon in non-cash write-downs of Google's investments in Time Warner's (NYSE:TWX) AOL and WiMAX upstart Clearwire (NASDAQ:CLWR). Include them, and stock-based compensation, and Google earned just $1.21 a share.
That sounds a lot worse than it is. Truth is, Google reined in costs about as well as it ever has. Traffic acquisition costs fell from $1.50 billion in Q3 to $1.48 billion in Q4. Capital expenditures declined by $300 million. What didn't suffer? Research and development; Google spent $100 million more on R&D in the fourth quarter.
Smart. Microsoft (NASDAQ:MSFT) is set to lay off 5,000. Yahoo! (NASDAQ:YHOO) is issuing pink slips, and would-be giant slayers such as Cuil are fading. Now is the time to invest to win.
Make it count, Google.
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