"What we have concluded is that we are going to keep doing our thing," Schmidt said in an interview. "There is no change in the plan at Google. We'll ride this thing out."
Google added 519 employees, down dramatically from 2,130 a year earlier, in what is typically a big hiring quarter. The company now has 20,123 employees. Capital expenditures fell 18% from the second quarter to $452 million.
That was a pleasant surprise from a company that gives its employees free meals and other perks and is known as much for being free-spending as it is freewheeling, analysts said.
"It probably wasn't the leanest ship on the sea," said Anthony Valencia, media analyst for TCW Group in Los Angeles. "Now they have shown they can rein things in and show good profitability without hurting continued investment in long-term growth initiatives."
Google, which already collects more than 70% of U.S. search advertising spending, is looking to spur growth through new advertising strategies. It sees opportunities in products such as online mapping and its video-sharing site YouTube. It also is expanding into new areas such as online software for businesses and display advertising.
"It looks like Google still has pretty good prospects to keep growing for a number of years," Morningstar analyst Larry Witt said.
Its controversial search advertising partnership, which would allow Yahoo to show search ads sold by Google, is under antitrust review by the Justice Department. Schmidt said that Google was "in active conversations" with the Justice Department but that he was unsure when the review would be completed.
He declined to discuss any concessions Google and Yahoo would be prepared to make, adding: "Settlement is too strong a word."
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jessica.guynn@latimes.com
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