Google announces first profits fall

Google has posted its first fall in profits, but still beat market expectations in the gloomy economic climate. The search engine giant reports its profits for the fourth quarter of the year were down 68% on the same period in 2007, from $1.21bn (£885m) to $382m (£275m).

However, overall it increased its revenue by 18% in the final quarter of 2008, the company reported last night (January 22).

Google says its results were affected by charges on investments during the quarter, but were better than analysts had expected due to strong advertising sales on its self-branded websites.

Total revenue was $5.7bn (£4.2bn), up 18% compared with the same quarter the previous year.

Google chief executive Eric Schmidt (pictured) says: “Google performed well in the fourth quarter, despite an increasingly difficult economic environment.”

UK revenue fell 1% to $685m (£500m), but the rest of Europe performed better, driven by strong performances in Germany, France and the Netherlands.

Overall international revenue, which accounted for 50% of total revenue, was “relatively” flat. Paid clicks for ads running alongside its web search results rose 18%.