Google and IBM surpass expectations
US technology companies were upbeat last night, with Google declaring that the worst of the recession is over and IBM raising its full-year outlook.
Google, the world’s number one search engine, said that its net income rose by 27 per cent in the third quarter to $1.64bn (£1bn), or $5.13 a share, compared with $1.29bn, or $4.06 per share, a year earlier, as the internet search advertising market showed signs of recovery from the global recession.
“While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future,” said chief executive Eric Schmidt.
Excluding traffic acquisition costs – the money that Google shares with partners – revenue was $4.38bn versus the $4.24bn expected by analysts.
Meanwhile, IBM reported third-quarter net profit rose 14 per cent to $3.2bn, or $2.40 a share, from $2.8bn, or $2.04 a share, a year earlier, as its growing focus on higher-margin software and services businesses helped it cope with weak technology spending. Revenue fell seven per cent from a year earlier to $23.6bn, although it rose one per cent from the previous quarter and was better than Wall Street’s forecast of $23.4bn.
IBM has managed to escape the worst of the tech downturn in the past year by shifting its focus from server sales to software and services in outsourcing, automation and technology support — areas that have remained relatively strong as companies seek ways to cut costs.
Meanwhile, Google said that it planned to launch an online store to deliver electronic books to any device with a web browser, threatening to upset a burgeoning market for dedicated e-readers dominated by Amazon’s Kindle.
The web search giant said it would launch Google Editions in the first half of next year, initially offering about half a million e-books in partnership with publishers with whom it already cooperates.