Google soars on results, Yahoo on Microsoft comments

Date: 17th October 2008

Author:  The National Business Review

Google's shares have climbed 8% after hours on news the search giant is defying the slump. Yahoo zoomed 15% following comments by Microsoft CEO Steve Ballmer that his company acquiring Yahoo "would make economic sense".

For Q3, Google's profit rose 35% to 1.35 billion on revenue that was up 39% to $US5.54 billion.

However, the company has already put the brakes on, says CEO Eric Schmidt, as the global economy enters what he says is "uncharted territory".

Although the number of people who click on its search ads grew 18% quarter-on-quarter, Google trimmed costs 18% during Q3 in anticipation of turbulance ahead, and reduced its usual frantic pace of hiring, brining on 519 staff during the quarter, compared to 2130 during Q2.

Mr Schmidt also reiterated recent comments by himself and Google cofounders Sergy Brin and Larry Page that the company wants to diversify more into display advertising.

Google's shares have fallen around 20% in the past month, in line with other large cap techs.

Meanwhile, Yahoo shares jumped 15% today following remarks by Microsoft CEO Steve Ballmer that his company is opening to reinstigating its on-again, off-gain takeover talks with Yahoo CEO Jerry Yang.

Any Microsoft-Yahoo deal, long propounded by your correspondent as the only way for Microsoft and Yahoo to rein in Google's huge lead in online advertising, and nascent lead in software-as-a-service apps, will also have immediate impact on local portals MSN.co.nz and YahooXtra.co.nz – which were created in opposition to each other after Telecom's divorce from Microsoft split the original Xtra.co.nz, but which may now need to recombine.

By Chris Keall

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Google Inc.

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