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Profits up as Google trims its spending

THE recession is prodding Google Inc to grow up faster than a lot of people anticipated.

With its revenue growth rapidly decelerating, Google has been clamping down on its expenses with a ferocity that seemed unthinkable a year ago, when the Internet search leader was still known for its spendthrift ways. Besides pampering its rapidly expanding work force, Google rarely hesitate to invest in new products without worrying whether they would make money.

A more disciplined approach paid off in the first quarter as Google's profit climbed 9 percent to surpass analyst expectations.

But the pleasant surprise, announced late Thursday, didn't seem to excite investors. Google shares dipped 50 cents in extended trading after finishing the regular session at US$388.74, up US$9.24.

"People might not be willing to pay as much for a company that's increasing its earnings with cost cutting instead of revenue growth," said Signal Hill Group analyst Todd Greenwald.

Google executives say there will be room for growth once the global economy recovers.

"Ninety-five percent of all our internal discussions are still about growth," Patrick Pichette, Google's chief financial officer, said in a Thursday interview. "But it would be irresponsible not to watch our expenses."

"No company is recession-proof," Chief Executive Eric Schmidt told analysts on Thursday. "Google is absolutely feeling the impact."



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