Google bucks low expectations with strong third quarter
Finally some good news: Google’s strong third-quarter performance defied low expectations today, reassuring spooked investors who had worried that the slowdown in the economy and consumer spending would hit the Internet search giant.
Its shares, which have suffered along with the broader market, gained $13.85, or 4%, at $353.02 in regular trading then jumped an additional 8% in extended trading following the earnings release.
Google's quarterly profit rose 26% along with strong demand for online search advertising, despite the economic woes that have begun to spread in Silicon Valley and the pinch that some online advertising companies have begun to feel.
The Mountain View., Calif., company posted net income of $1.35 billion, or $4.24 a share, up from $1.07 billion, or $3.38 a share, a year ago.
Revenue climbed 31% to $5.54 billion. Excluding so-called traffic acquisition costs, which are commissions paid to partners, Google's revenue increased 34% to $4.04 billion.
Google CEO Eric Schmidt said in a prepared statement: "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."
Wall Street had trimmed estimates for Google in recent weeks, fearing slowing demand for online advertising and the impact of the strengthening U.S. dollar. Shares had plunged about 30% over the last month.
Some didn't stop believing. American Technology Research analyst Rob Sanderson wrote in a research note that Google's dominance of the search market would prove invaluable in an economic downturn even if the rest of the online advertising market declines.
"The paid search model is proving to be very resilient," he wrote, predicting that Google would do better than feared.
-- Jessica Guynn
Photo: Google CEO Eric Schmidt. Credit: Matthew Staver / Bloomberg News