Dec 4, 2008

Business - Google tightening its belt: WSJ

WASHINGTON (AFP) - Internet search king Google Inc. plans to tighten its belt amid slowing revenue growth, cutting back on spending and new projects, The Wall Street Journal reported on Wednesday.

"We have to behave as though we don't know" what's going to happen, the newspaper quoted Google chief executive Eric Schmidt as saying.

The Mountain View, California, Internet giant will curtail the "dark matter," Schmidt said of projects that "haven't really caught on" and "aren't really that exciting."

Schmidt told the Journal that Google is "not going to give" an engineer 20 people to work with on certain experimental projects anymore. "When the cycle comes back," he said, "we will be able to fund his brilliant vision."

The newspaper report came as Trip Chowdhry, an analyst for Global Equities Research, said he expects Google to post revenue of 15.71 billion dollars this year, 15.23 billion dollars next year and 14.57 billion dollars in 2010.

"Our research indicates that the challenging macro-economic conditions continue to worsen Google's advertising driven consumer Internet business," Chowdhry said.

Google's share price has fallen more than 50 percent over the past year, finishing at 275.11 dollars in New York on Tuesday.

The Journal said online advertisements connected to Internet searches still accounted for 97 percent of Google's revenue but products such as Google Checkout, a Web payment service, and Google TV Ads, which sells television advertising time, haven't generated significant revenue.

Last month, Google announced it was ending its virtual world experiment, Lively, at the end of December as part of a bid to "prioritize our resources and focus more on our core search, ads and apps business."

It also cancelled experimental search results website SearchMash.

Earlier this year, Google co-founder Sergey Brin announced plans to "significantly" reduce its workforce of some 10,000 contract workers.

Google has also been looking for new revenue opportunities.

Last month it began running ads on financial news website Google Finance and the Journal said it plans to soon run ads on news aggregator site Google News.

The Journal said "top priorities" for investment include display ads, advertising on mobile phones and online business software.

Google is known for its benefits, such as a free cafeteria and other perks, but the Journal said those may be cut back as part of the belt-tightening.

Google's third-quarter profits beat the expectations of Wall Street analysts. Net profits rose 26 percent to 1.35 billion dollars while revenue, at 5.54 billion dollars, was up 31 percent from the same period of 2007.

No comments: