Google’s third-quarter profit jumps 26%, but dark clouds loom

Google has defied the global economic slowdown, recording 26% in net profit for the third quarter, but new research on advertising spending indicates the turmoil will eventually hit the internet giant.

Google has defied the global economic slowdown, recording 26% in net profit for the third quarter, but new research on advertising spending indicates the turmoil will eventually hit the internet giant.

Figures from research firm Collins Stewart show US companies are cutting back on advertising spending, with online ad revenue in the US set to fall by $US6.7 billion between now and 2010.

The firm also says growth in the online advertising sector will slow to less than 20% by next year, the lowest level since 2002.

But if Google is being hit by the slump, it is not showing it. The company recorded a third-quarter income rise of 26% to $US1.35 billion from $US1.07 billion last year. The company’s share price jumped 10% after the announcement to $US390.

Chief executive Eric Schmidt says despite global economic conditions, business is going well.

“It is pretty clear the economic situation today globally is worse than people were predicting a month ago. When I talk to other CEOs, in Europe and in America, it is clear that the economic situation is so fluid that we’re all sort of in uncharted territory,” Schmidt said on an analyst conference call.

“Google had a good quarter. Traffic and revenue were both solid and we kept tight control on costs.”

The group says revenue in the third quarter jumped 31% to $US5.54 billion.