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Google profit soars in third quarter

By Glenn Chapman
Agence France-Presse
First Posted 08:17:00 10/15/2010

Filed Under: Internet, Earnings, Company Information, Advertising, mobile phones, Forecasts

SAN FRANCISCO?Google on Thursday reported that its quarterly net profit soared on the back of its thriving Internet advertising service and that its display and mobile ad businesses are taking wing.

A 32 percent leap in net profit to $2.17 billion and a 23 percent surge in revenue to $7.29 billion trumped Wall Street expectations and sent Google shares up 8.95 percent to 589.37 dollars in after-hours trading.

"Google had an excellent quarter," said the California company's chief executive, Eric Schmidt.

"Our core business grew very well, and our newer businesses ? particularly display and mobile ? continued to show significant momentum."

Google executives were eager to show that the Internet giant can pump money from more than just ads posted with search results and offered a rare glimpse into the revenue breakdown in an earnings call with press and analysts.

Google is on track this year to take in $2.5 billion from display advertising and more than $1 billion from ads on mobile devices, according to senior vice president of product management Jonathan Rosenberg.

Display ads are essentially online billboards as opposed to promotional links served up with search results.

While not revealing whether YouTube is making a profit, Google executives noted that the company makes money from display ads linked to the two billion daily video views at the Google-owned website.

"Clearly we are running on all cylinders in display," Rosenberg said.

Google is chasing Facebook and Yahoo! in the online display ad business and is expected to have a six percent share of a US market that should total $8.6 billion this year, according to eMarketer.

Facebook and Yahoo! account for 9.7 percent and 15.3 percent of the US display ad market respectively, eMarketer reported.

The Google-backed Android software platform for mobile phones has been a "phenomenal success" and the handsets are used heavily for searching the Internet, Schmidt said.

Search remains the core of Google's business, and revenue, Rosenberg said.

"Search is still the most monetizable moment on the Internet," he said. "As search gets better, our ads have to keep up."

Google recently enhanced its search engine with an "Instant" feature that displays suggested results that evolve with each letter typed in query boxes.

Google said it is ramping up hiring efforts to recruit top talent.

"We stepped up our hiring machine," said Google chief financial officer Patrick Pichette. "The difference between winners and losers will be based on who we can attract and retain."

Google was being "generous but frugal" in its hiring tactics, Pichette added to fend off concerns that profits might suffer under the weight of rising employee expenses.



Copyright 2014 Agence France-Presse. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.



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