Google’s profits rose by 9 per cent in the first quarter as it reaped the benefits of a shift to online advertising from traditional media, as well as a cost-cutting drive. Yet the internet search giant’s revenue growth fell to its slowest pace since it went public nearly five years ago, illustrating how the recession is squeezing even the strongest of companies.

Eric Schmidt, the chief executive, said: “These results underline both the resilience of our business model and the ongoing potential of the web as users and advertisers shift online.” However, he warned: “No company is recession-proof. Google is absolutely feeling the impact.”

Net profit for the first three months of this year was $1.42 billion (£952 million) compared with $1.31 billion a year earlier. Revenues came in at $5.51 billion, 6 per cent higher than last year, but a fall of 3 per cent on the previous quarter – the first sequential decline in revenue for Google.

Investors reacted positively to the better-than-expected results, sending the shares up by more than 5 per cent in after-hours trading.

Despite the broad-based slump in global advertising spending, Google said that paid clicks – by web surfers on Google’s text-based search advertisements – rose by 17 per cent in the first quarter from a year earlier.

Google has curtailed some employee perks, shed outside contractors and closed services that are not paying off. It has eliminated nearly 300 jobs.

Separately, YouTube, the website owned by Google, said that it was linking up with big studios to stream full-length movies and TV shows on its site free of charge. Advertising revenue will be shared with the content providers Sony Pictures, CBS, MGM, Lionsgate, Starz and the BBC.

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