(AFP) – Oct 16, 2008
NEW YORK (AFP) — Internet search giant Google, shrugging off a weakening US economy, reported strong third-quarter profits on Thursday which beat the expectations of Wall Street analysts.
Net profits rose 26 percent in the third quarter from the same period last year to 1.35 billion dollars while revenue, at 5.54 billion dollars, was up 31 percent from the same period of 2007.
The Mountain View, California-based company reported diluted earnings per share of 4.92 dollars, better than the forecast of 4.76 dollars per share.
"We had a good third quarter with strong traffic and revenue growth across all of our major geographies thanks to the underlying strength of our core search and ads business," Google chief executive Eric Schmidt said in a statement.
"While we are realistic about the poor state of the global economy, we will continue to manage Google for the long term, driving improvements to search and ads, while also investing in future growth areas such as enterprise, mobile, and display," Schmidt added.
Google's share price soared 9.68 percent in after-hours trading in New York to 387.20 dollars after having already gained 4.08 percent during the day on Wall Street.
In a conference call with analysts, Schmidt said the Internet search giant still hoped to conclude an advertising deal with Yahoo that would put Google technology to work targeting search ads on Yahoo pages.
The deal is currently being reviewed by the US Department of Justice because of anti-trust concerns over an advertising tie-up between Google and Yahoo, respectively number one and number two in the Internet ad market.
"We're hopefully nearing the end of that period," Schmidt said. "In my view many of the complaints we've seen come from the fact that many people don't understand how auctions really work."
Allen Weiner, an analyst at Gartner, said that even without the ad deal with Yahoo, Google was well positioned for the remainder of the year.
"That's not going to materialize very quickly," he told AFP of the Yahoo-Google deal. "Whatever's going to happen is not going to have a short term impact.
"They seem to be prepared for whatever happens," Weiner said. "I suspect they're going to have a pretty good fourth quarter ... even with a recession."
Weiner also said he expected Google to eventually make money off YouTube, the popular video-sharing site it purchased for 1.65 billion dollars two years ago.
"They're continuing to innovate on YouTube and they're just starting to scratch the surface on how they can monetize it," he said. "I think YouTube is going to pay off."
The company said revenue from Google-owned websites, two-thirds of total revenue, was 3.67 billion dollars in the third quarter, up 34 percent from the same period last year.
It said revenue from Google partner sites through its AdSense programs was 1.68 billion dollars, 30 percent of total revenue and up 15 percent from the same period of 2007.
Google said revenue from outside of the United States totaled 2.85 billion, or 51 percent of total revenue in the third-quarter of the year.
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