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Google 3Q profit up 32 pct as online ads strong

15 October 2010 09:50 (UTC +04:00)

Baku - APA-Economics. Google Inc.’s third-quarter earnings demonstrated that the Internet search leader is capable of surpassing investors’ short-term expectations while still investing heavily in long-range projects, Associated Press reported.

Google reported a 32 percent jump in net income Thursday and provided the most persuasive evidence yet that its past investments are paying off, helping it diversify away from search advertising.

Wall Street was encouraged, and sent Google’s shares soaring 9 percent to $590.01 in extended trading after the release of results.

Text links placed above or alongside search results are still Google’s main source of revenue, but the company has laid out billions to beef up its ability to sell image-based "display" ads, ads inside Web videos and on mobile phones. The company paid $3.2 billion for DoubleClick, a display ad network, and $681 million for mobile-ad firm AdMob.

Executives indicated Thursday that display advertising accounted for nearly 10 percent of ad revenue in the quarter, and mobile advertising was almost 4 percent.

Those successes could help calm investors worried about Google’s insistence on spending more despite ongoing pessimism about the economy. The Web search leader added 1,500 workers in the quarter, for a total of 3,500 new employees so far this year. Capital expenditures â€” what Google pays for data centers, servers and networking equipment to keep its growing number of Web services online â€” increased more than fourfold to $757 million from $186 million a year earlier.

Google is known for making long-shot investments. This week, some of its oddest projects yet came to light: It’s dabbling in wind farms and computer-driven cars.

For July through September, Google’s net income rose to $2.2 billion, or $6.72 per share, from $1.6 billion, or $5.13 per share, a year earlier.

Excluding certain expenses, Google earned $7.64 a share, topping the $6.69 a share analysts expected.

Google’s tax rate was lower than usual in the quarter, which helped boost net income. But even without that boon, earnings would have beat expectations, Moran said.

Revenue rose 23 percent to $7.3 billion from $5.9 billion a year earlier. After subtracting commissions paid to its ad partners, Google’s revenue stood at $5.5 billion, about $200 million more than analysts predicted, according to a Thomson Reuters survey.

The company ended the quarter with about $33.4 billion in cash and marketable securities.