Google profits up as search attracts more ad spend

Google has reported revenues of $5.7bn for the three months ending in December, up 18% year-on-year, but an increase of just 3% on the previous quarter's figures, The Guardian  reports.

Profit was down significantly to $382m, compared with $1.2bn a year ago - however, this was largely the result of investments in internet rival AOL and wireless broadband provider Clearwire, on which Google took $1.1 billion writedowns.

The report added that Google has become more reliant on money generated by advertising on its own websites, rather than through its advertising networks..

Google's own sites generated $3.8 billion of the quarter's overall revenues, making up 67% of its income, compared with 45% just year ago.

The Guardian also quoted Jason Avilio, an analyst with Kaufman Bros, saying, 'There is a lot of fat to trim operationally, but nothing like the thousands of layoffs at other tech companies.'

Google has suggested changing the terms of its employee stock options, reawakening a debate over pay practices that pitted Silicon Valley against Wall Street during the last technology downturn in 2000, the Financial Times reports.

The FT said that the new option plan will let employees whose stock options are "underwater", or carry an exercise price higher than the current share price, exchange them for new options at existing prices.

The arrangement, prompted by a 59% drop in share price since its peak in late 2007.

Option repricing was a source of serious contention when the dot-com bubble burst and Wall Street accused the technology sector of protecting workers when other shareholders suffered. Eric Schmidt, CEO of Google, reportedly replied to a question along those lines,  "Would you prefer we had the Wall Street firm's bonus model‾ That doesn't seem a very good model to me."

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