Earnings Reports From Google, IBM Reflect Recovery

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IBM and Google posted better than expected results in the third quarter. It's a sign that the economy is improving.

STEVE INSKEEP, host:

A couple of leading technology companies posted better-than-expected financial results in the third quarter. This news from IBM and Google is prompting talk of recovery in the tech world.

NPR's Laura Sydell reports.

LAURA SYDELL: Google had some pretty stellar results. They had earnings of more than $1.6 billion, and that is the most money the company has ever made in a three-month period. Google's chief executive, Eric Schmidt, says he thinks the worst of the recession is over. Google is still a long way from the kind of double-digit growth it once enjoyed, but analysts believe its search advertising - which is the majority of the company's business - is going to bounce back faster than online display ads.

So, recovery is likely to be slower at companies like Yahoo and Time Warner's AOL, which rely heavily on display ads. IBM sales actually fell last quarter but net income was up 14 percent. Many companies are still spending less on technology, but IBM is increasing its revenue by relying more on outsourcing and other services that save clients money and are more profitable than selling hardware. Since the mid-1990s, IBM has transformed itself from a hardware company on the brink of collapse to a one-stop technology shop.

Laura Sydell, NPR News, San Francisco.

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