Google Grooves on Big Quarter

Reyes told analysts Google believed that in the fourth quarter it became the largest generator of advertising revenue on the Internet.

Traffic-acquisition costs, the portion of revenue shared with Google's partners, fell to 77% of Google Network revenue in the latest quarter from 85% a year ago. Part of the reason for the TAC decline, indicated Reyes, was greater traffic growth at sites for which Google has lower TAC obligations.

As in the previous quarter, Google said that about 35% of its revenue came from outside the U.S. Schmidt told analysts that the company had set an "extremely" high priority on developing its international business in 2005, and said that the company expected to do "very, very well" internationally.

Schmidt spoke optimistically about advertisers' willingness to pony up for the advertising that Google is selling. "We believe that the largest companies worldwide have many, many, many dollars in appropriate currencies to invest in our kind of advertising," Schmidt said. "There does not now seem to be price resistance."

Spotlighting Google's unusually beneficent corporate culture, co-founder Sergey Brin told analysts that Google had doled out $12 million dollars' worth of restricted stock to employees in the fourth quarter as part of the company's Founders' Awards recognizing valuable contributions to the company's business. In some cases, said Brin, individual employees received "millions of dollars" worth of stock or received an award substantially exceeding the value of options they held.

Shocking very few listeners on the call, Reyes answered a question about employee turnover with the comment, "Our attrition rates are very, very de minimus."

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