Google profit up 19% but revenue rose only 3%

SAN FRANCISCO -- But investors seemed more concerned about the 3% growth in revenue, to $5.52 billion. That was the Internet search leader's slowest year-over-year growth since it went public five years ago, and the news sent its shares down 3%, to $429.54, in after-hours trading. Google reported results after markets closed.

Google's revenue growth rate has declined seven-straight quarters, says Trip Chowdhry of Global Equities Research. That could signal rough times for other Internet companies that heavily rely on advertising and e-commerce sales, Chowdhry says.

The Silicon Valley company remained upbeat but did not provide a financial outlook, as is its custom.

Although the economic downturn has made it harder for Google to sell ads, CEO Eric Schmidtsaid, he doesn't expect things to become tougher.

"A quarter ago, we had no idea where the bottom (of the downward economic spiral) was," Schmidt said in a conference call. "It appears now the business is stabilizing."

If not for stock compensation expenses, Google said, it would have made $5.36 per share, exceeding the average analyst estimate of $5.09.

In a nod to slackening ad sales and increased competition in the search engine market, Google in March cut its workforce by about 200 people, or 1%. It also shuttered its newspaper- and radio-advertising units.

But Google — which has the world's most visited website — is branching into other areas. Last week, it said it is developing a PC operating system that is initially targeted at popular, low-cost netbooks. Google hopes to have it on computers by the second half of 2010.