Google Makes Money; No News There

Despite being embroiled in the middle of the worst global recession of our generation, internet giant Google continues to make money although not at the feverish pace of just a few years ago. Still, with its income up by 8% in the first quarter of the year, the company is in an enviable position.

As usual.

Once Again Google Performs Admirably

Analysts had been expecting Google to taper off, but the first quarter figures show that if any company can weather the current storm, then that would be Google.  Revenue did slip compare to the fourth quarter of 2008, but given that the worst of the recession didn’t settle in until after the first of the year, Google’s performance is admirable.

Google still makes a big bundle off of AdWords (advertisers) while not quite a few webmasters are still raking in big bucks with AdSense (publishers).  Google’s advantage is that the company basically owns web search which allows it to serve up ads to most everyone who logs on. Given that its algorithm is almost always spot on, Google remains an attractive and relatively cost effective way for businesses to get the word out.

Chairman Eric Schmidt Speaks

Relating to its most recently quarterly performance, Google Chief Executive Officer Eric Schmidt had this to say: “Google had a good quarter given the depth of the recession–while revenues were down quarter over quarter, they grew 6% year over year, thanks to continued strong query growth. These results underline both the resilience of our business model and the ongoing potential of the web as users and advertisers shift online. Going forward, our priority remains investing for the long term to drive future growth in our core and emerging businesses.”

Has Google’s Ad Income Peaked?

Some analysts fear that Google’s ad income may have peaked, but we’ve been hearing them say this for years. Clearly, advertising dollars are harder to come by, but given that newspaper advertising continues to dry up and internet traffic is still expanding, I’m sure that Google will find a way to keep moving forward. Should the economy begin to recover this year, then advertisers will come back, adding more fuel to the Google fire.

What About Twitter?

It is no secret that Google is interested in buying Twitter, given that site’s rapid growth and its threat as a search engine. Personally, I have found that using Twitter Search yields some amazing results, a great way to connect with people who are discussing topics of interest to you and in real time too.

Though I don’t use Twitter Search as much as Google Search, even an incremental shift by users can shift search traffic.

Google will pay handsomely for Twitter and they’ll figure out a way to monetize the site.   I could see Google incorporating the feature’s of Twitter Search into its own toolbar, but I also could see them leaving Twitter alone and running ads along the side of these results.  Maybe Google would do both.

Returning to Their Roots

As far as the rest of the web is concerned, the other internet giants will continue to work to make their business models more efficient. Now that EBay has sold StumbleUpon and has an Initial Public Offering (IPO) in the works for its Skype internet telephony unit, they’ll be returning to their core business of managing online auctions and internet retailing.

I expect that other businesses will be doing the same thing — dumping unrelated subsidiaries to concentrate on what they do best. In this economy, returning to your core seems like the wisest (and safest) move to make.