The slumping economy has broken Google’s streak: The Internet search giant said Thursday that it had its first decline in revenue compared with the previous quarter since it went public in 2004, as marketers reined in their online advertising budgets
But Google is also showing signs that it has adapted quickly to the new economic reality. With its growth slowing sharply compared with a year ago, Google has imposed severe cost controls and slashed expenses. As a result, Google reported net income for the first quarter of $1.42 billion, an 8 percent jump from a year earlier and higher than analysts expected.
“The freewheeling, high-spending days are gone,” said Jeffrey Lindsay, an analyst with Sanford C. Bernstein & Company. “They’ve matured a lot and there is a good dose of rationality.”
The clearest sign of change may be that for the first time in its history, Google’s work force shrank. The company ended the quarter with 20,164 employees, down 58 workers from the end of the year. The decline may be modest, but it is a sharp contrast from just 18 months ago, when Google added more than 2,100 employees in a single quarter.
Google’s rate of growth has slowed in an equally stark fashion as a result of the recession and of Google’s own vast size. Revenue in the first quarter rose just 6 percent to $5.51 billion from $5.2 billion a year ago. First quarter growth was 42 percent in 2008 and 63 percent in 2007.
Despite the abrupt slowing of its growth, Google continued to outperform both its rivals and the overall market for online advertising, which has declined in recent months.
“No company is recessionproof,” Eric E. Schmidt, Google’s chief executive, said in a conference call with investors. “Google is absolutely feeling the impact. Users are still searching, but they are buying less.”
But Mr. Schmidt said: “Despite the tough economic climate, we think Google had a good quarter.”
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