Google’s Cost Cutting Pays off with Rise in Profits

Google surprised analysts this morning with a 9% increase in profit in the first quarter of 2009. The good news is likely a product of Google’s aggressive cost-cutting measures, which ranged from axing unprofitable programs to cutting back on its notoriously lavish employee benefits. The search giant earned $1.42 billion in the quarter.

While Google execs used the announcement to discuss their plans for further growth, analysts were quick to point out that first-quarter revenues only increased 6% year-over-year, making 2009 the first year since Google’s IPO that it has not grown in double digits in the same time period. (Below, the Googleplex, the company’s Mountain View, California headquarters.)


Worse yet, Google’s revenue actually dropped from Q4 in 2008 to this quarter, despite their new CFO’s aggressive measures to cut the fat and fund lucrative projects. In the last few months, the company has laid off full-time employees, split ways with contractors, and closed down a handful of technologically promising, if potentially unprofitable, Internet services.

Google also said it would begin to press its YouTube property more aggressively for profit. In a separate announcement, YouTube said it would begin airing more feature-length movies and TV shows that would be buttressed by advertising, with the blessing of several major partner studios, including Sony, CBS, and Metro-Goldwyn-Mayer.

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