Google growth slow during 1st quarter

Google Chief Executive Eric Schmidt

SAN FRANCISCO — Google Inc. eked out a higher profit in the first quarter as the Internet search leader trimmed its work force and winnowed other expenses to overcome the slowest revenue growth since the company went public nearly five years ago.

The results released Thursday sent Google's shares higher, even as they illustrated how the recession is squeezing profitable companies such as Google.

The Mountain View, Calif.-based company boosted its profit largely by cutting costs, including reducing its number of employees for the first time since its August 2004 initial public offering.

Google earned $1.42 billion, or $4.49 per share. That was a 9 percent increase from $1.31 billion, or $4.12 per share, at the same time last year.

If not for costs for employee stock compensation, Google said it would have made $5.16 per share. On that basis, Google exceeded the average estimate of $4.93 per share among analysts surveyed.

Google shares climbed $11.07, nearly 3 percent, in Thursday's extended trading after ending the regular session at $388.74, up $9.24.

First-quarter revenue of $5.5 billion was up just 6 percent from last year, marking the first time Google has posted less than double-digit revenue growth.

After subtracting commissions paid to its advertising partners, Google's revenue stood at $4.07 billion — about $10 million below analyst estimates.

In a telling sign of the recession, Google's revenue fell from one quarter to the next for the first time. Its revenue in the prior quarter had been $5.7 billion.

Like other businesses that rely on advertising, Google is having more trouble pulling in revenue. Companies are clamping down on their marketing budgets during the worst economic downturn in nearly 30 years.

Google, though, is holding up far better than other advertising-driven media, such as the newspaper industry. For instance, revenue at Gannett Co., the largest U.S. newspaper publisher, plunged by 18 percent during the first quarter.

"No company is recession-proof," Google Chief Executive Eric Schmidt told analysts in a conference call. "Google is absolutely feeling the impact."