Google beats profit expectations; talks up Twitter

The search giant’s earnings rose 9% in quarterly results released this morning on a conference call notable for the praise lavished on the upstart Twitter.

Google chief executive Eric Schmidt said his company is feeling the impact of the recession as he announced its quarterly results this morning.

The company expects is second and third quarters to be “Slow ... If you look at the economic situation, we're still basically in uncharted territory."

Mr Schmidt’s commentary notwithstanding, Google’s bottom line continued to boom during the quarter, with profit rising 8.9% to $1.42 billion. Revenue also grew strongly, if not as quickly in previous quarters.

Google shares (NAS: GOOG) were flat in after hours trading following the call.

It seems logical to assume consumers buying less would click on fewer Google Ad Words but, maybe due to diligent bargain hunting, click-through rates actually climbed 17%.

Trimming staff
Beyond buoyant customer activity, Google kept its profit up by slashing costs. After years of go-go hiring, the company reduced its worldwide head-count during the first quarter from 20,222 to 20,164 full-time employees. Jobs at Google’s small Auckland office were among those lost.

Google, Microsoft, hot to tweet
The conference call was notable for the praise Mr Schmidt heaped on hot micro-blogging site Twitter, now has around 20 million users, and counting.

Mr Schmidt’s love-in could be because Google is, according to the well-connected Kara Swisher, in a bidding war with Microsoft for the right to serve ads on Twitter.

The alternative, put forward by insiders: Google buys the Twitter outright. If the scuttlebutt can be believed the two are stalled over price, with Twitter’s founders demanding $US1 billion - four times the value of its private equity shares.

Google boss: how Twitter could make money
Although Twitter is famously revenue-less, Mr Schmidt, as he heaped on the Twitter love, also mused about potential avenues for generating cash:

“Twitter proves innovation is alive and well in Silicon Valley. It's really come on board very strong in the last year.

The question is how could you make some money on that? Without comment specifically about Twitter, because there are a number of real-time update companies like Twitter, you can imagine that to the degree they become successful, and obviously Twitter is already doing so, it could be a channel for product information, marketing information, real-time information, for which you can hang advertising products, whether it's a text ads or video ads.”