A wave of optimism swept through the US yesterday as Google recorded its strongest revenue growth in over 12 months, with investors convinced the advertising market is on its way up.
But the results weren’t as good for handset manufacturer Nokia, which lost more than $1.4 billion in three months as it continues to lose its share of the smartphone market to rivals Apple and Research in Motion.
Google announced sales grew to $US5.94 billion in the third quarter, up from $US5.52 billion during the second quarter and $US5.54 billion during the same period 12 months ago.
Revenue was $US4.38 billion, well above analyst’s expectation of $US4.24 billion. Net profit was $US1.64 billion compared to last year’s result of $US1.29 billion.
Chief executive Eric Schmidt said in a statement the results indicate there is a recovery occurring in the wider economy.
“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,” he said. “The worst is behind us… We’re seeing aspects of recovery, not just in the US but also in Europe.”
The announcement, which continues the results recorded in the previous quarter when the company posted year-on-year profits, comes after a year of cost-cutting for the company.
Google is well-renowned for its lavish headquarters and extravagant employee programs, but it has cut down on employee benefits, including cafeterias, and time spent pursuing experimental projects. Extensive layoffs were also announced.
Instead, the company has spent the last year focusing on its main product, paid advertising. But Schmidt now says the company will continue hiring more employees, with projects in mobile and internet technology on the cards.
“We now have the confidence to be optimistic in our future and we’re going to invest as a result of that,” he said.
Meanwhile, Finnish mobile giant Nokia has announced a $1.46 billion loss for the September quarter from its Nokia Siemens Networks venture, with the company blaming challenging market conditions. Shares in the company fell 10% to 9.18 Euros after it released the results.
The company recorded an $85 million loss, after recording a $189 million profit last year. Nokia also said it took a hit in smartphone sales from the previous quarter, with its market share dropping from 41% to 35% in the September quarter.
“It is clear that NSN has lost market share. The top priority for NSN is restoring growth to the company’s top line and reversing the market share dynamic,” chief executive Olli-Pekka Kallasvuo said in a conference call. The company is currently in the middle of a cost-cutting restructure in an attempt to save $1.1 billion.
Ovum analyst Nathan Burley says Nokia is losing ground to Apple and Research in Motion, with the iPhone and BlackBerry devices dominating the smartphone sector.
“They are the two companies that are really growing their market share. Obviously Apple is a big influencer, as they have grown their share from nothing a few years ago to dominating a share of the market. And RIM is growing quite strongly.”
“Nokia is still obviously the dominant player in the market, they have a very strong brand, but not as strong in smartphone devices as general handsets. In the developed markets it’s going to need to do some things to win back market share… there is no doubt they have their work cut out for them.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
