Google revenues up 18 per cent

Revenue rose 18 pct -- a shadow of 50 per cent growth levels that Google used to enjoy.

Google Inc8217;s quarterly earnings beat Wall Street forecasts as strong advertising sales on its self-branded websites helped the Internet leader defy the gloom pervading the tech sector.

The results,which sent Google shares up 2.6 per cent in after-hours trading,were a relief for investors who had been stunned by a series of dismal reports from Microsoft Corp,Intel Corp and other tech companies.

8220;We have something to feel good about with this Google news in what has been shaping up to be a gloomy earnings period,8221; said Keith Wirtz,president of Fifth Third Asset Management.

Google said fourth-quarter net income fell to 382 million,or 1.21 a share,from 1.21 billion,or 3.79 a share,a year earlier due to impairment charges on its investments in Clearwire Corp and Time Warner Inc unit AOL.

Excluding one-time charges,profit was 5.10 a share,beating the average analyst forecast of 4.95 according to Reuters Estimates.

Revenue rose 18 per cent to 5.7 billion 8212; a shadow of the 50 per cent growth levels that Google used to enjoy,but considered by analysts to be a robust performance given the weak economy and corporate cutbacks in advertising spending.

8220;It was,all things considered,very good numbers,8221; said Wunderlich Securities analyst Martin Pyykkonen. 8220;In this market and relative to the numbers that are being put out 8212; I would go so far as to say relative to the numbers that Yahoo probably will put out next week 8212; these will look good.8221;

STOCK OPTION EXCHANGE

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Google said it will offer employees a one-for-one stock option exchange for 8220;underwater8221; options as an incentive for employees to stay with the company. The new options will have an exercise price equal to the closing price on March 2.

Google-owned sites,like google.com and google.co.uk generated 67 per cent of revenue,or 3.81 billion,rising 22 per cent from a year ago. Traffic acquisition costs,the portion of revenues shared with Google8217;s partners,decreased to 1.48 billion.

8220;It8217;s clear that macroeconomic challenges continue to rob Google of growth,but it seems equally clear that the company continues to make headway in this market,and take share in this market,8221; said Cantor Fitzgerald analyst Derek Brown,who has a buy rating on Google and makes a market in its shares.

Google Chief Executive Eric Schmidt struck a cautious note,saying the last quarter had benefited from the holiday season when many users were seeking retail bargains online.

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8220;Now clearly we8217;re in a worldwide recession as everybody knows,rising unemployment,foreclosures,that sort of thing,8221; he said on a conference call. 8220;But we don8217;t know how long this period will last. We obviously hope it will be short.8221;

The Mountain View,California business ended the quarter with nearly 16 billion in cash,at a time when many tech and media companies are trading at all-time low valuations.