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1st June, 2009, 05:00 AM
Internet giant Google has seen its profits rise again but chief executive Eric Schmidt said the economic environment remains tough, with web users buying less through its adverts.
Google Inc reported first-quarter revenue of $5.51bn (?3.7bn), a 6% increase from the same period a year ago but down 3% from the three months to January - its first ever such decline.
Compared to other internet and media companies dependent on falling advertising revenue, Google has been extremely resilient to the economic downturn.
"Paid clicks" by web surfers on its text-based search ads rose 17% in the first quarter from a year earlier.
However, the cash Google is paid per click appears to have declined, as advertisers reduced the amount they were prepared to pay for search keywords.
Mr Schmidt admitted trading conditions were difficult.
"We're still basically in uncharted territory," he said.
"Google is absolutely feeling the impact. Users are still searching but they're buying less. Ultimately, what that really means is the ads are converting less."
Net profit for the three months to the end of March was $1.42bn (?960m), or $4.49 (309p) a share, up from $1.31bn (?884m), or $4.12 (278p) a share, a year earlier.
Executives from the web giant said lower labour costs, as the company reset performance-based bonuses for the new year, kept expenses in line.
And after several years in which Google expanded its workforce, the company cut jobs in the first quarter. It now employs 20,164 people worldwide.
Google announced three rounds of cuts between January and March, although the 200 losses in sales and marketing announced in March were not reflected in the latest figure.
In a separate development, YouTube - owned by Google - said it has signed a deal with Sony to add the company's films and TV shows to the video-sharing site and that it was talking with other big studios.
Mr Schmidt said Google would be happy to pursue an advertising partnership with companies like Twitter, the microblogging site that is often cited as a possible acquisition target for the Californian search giant.
Google Inc reported first-quarter revenue of $5.51bn (?3.7bn), a 6% increase from the same period a year ago but down 3% from the three months to January - its first ever such decline.
Compared to other internet and media companies dependent on falling advertising revenue, Google has been extremely resilient to the economic downturn.
"Paid clicks" by web surfers on its text-based search ads rose 17% in the first quarter from a year earlier.
However, the cash Google is paid per click appears to have declined, as advertisers reduced the amount they were prepared to pay for search keywords.
Mr Schmidt admitted trading conditions were difficult.
"We're still basically in uncharted territory," he said.
"Google is absolutely feeling the impact. Users are still searching but they're buying less. Ultimately, what that really means is the ads are converting less."
Net profit for the three months to the end of March was $1.42bn (?960m), or $4.49 (309p) a share, up from $1.31bn (?884m), or $4.12 (278p) a share, a year earlier.
Executives from the web giant said lower labour costs, as the company reset performance-based bonuses for the new year, kept expenses in line.
And after several years in which Google expanded its workforce, the company cut jobs in the first quarter. It now employs 20,164 people worldwide.
Google announced three rounds of cuts between January and March, although the 200 losses in sales and marketing announced in March were not reflected in the latest figure.
In a separate development, YouTube - owned by Google - said it has signed a deal with Sony to add the company's films and TV shows to the video-sharing site and that it was talking with other big studios.
Mr Schmidt said Google would be happy to pursue an advertising partnership with companies like Twitter, the microblogging site that is often cited as a possible acquisition target for the Californian search giant.