Google's £6.4bn cash pile worry

Global financial market turmoil is causing headaches for Google's treasury department, which says the problem of managing its $12.7 billion (£6.42 billion) cash pile is to blame for disappointing second-quarter profits.

Advertising revenue held up well despite weaker economic conditions but volatile interest rates and increasingly expensive forex hedging took their toll.

Net profits rose 35% in the quarter to $1.25 billion, up from $925 million a year ago. Revenues grew by 39% to $5.37 billion. However, juggling cash reserves cut Google's "other income and expenses" by more than half to $57.9 million from $137.1 million a year ago.

Chief financial officer George Reyes blamed slower growth on lower yields of cash and lost interest on the $3.2 billion cash Google paid for advertising technology company DoubleClick.

It also spent more to hedge foreign currency exposure as international revenue rose to 52% of revenue from 51% the previous quarter and 48% a year before.