Google (NASDAQ: GOOG) does not expect the recession to drive its revenue down. That sounds unlikely, but it is the company's party line. According to Reuters, Google CEO Eric Schmidt "said the economic storm will affect all forms of advertising, including the online ads that Google depends on, but that Google was unlikely to see a drop in revenue." That would make it the only large advertising-related company in America not hit hard by the recession.
Is that possible? Maybe. But, it is a real stretch. The Google model depends on selling hundreds of millions, if not billions, of text link ads each month next to the search results on it flagship site and the sites of partners. Since these links are bought across a tremendous number of businesses and industries, Google may assume that the breadth will save it.
Breadth may not be enough. Since almost every sector of the U.S. economy is being damaged by falling consumer and business confidence and sales, it is hard to imagine that any industry is strong enough to support any growth in marketing on Google. As a matter of fact, almost every industry should be cutting the expenses of that marketing.
The reason to believe Schmidt is that he already knows what the revenue at Google is for the first two months of the current quarter. But he does not know what the rest of the year may bring.
Douglas A. McIntyre is an editor at 24/7 Wall St.
Will Rich Ross really have a positive impact on Disney's movie operations?
Consumers sick of recession, may spend extra on holidays
Corrections, seasonality and Santa Claus
