SAN FRANCISCO (Reuters) – Google Inc. on Thursday posted a 92 percent jump in quarterly profit and revenue near the top end of forecasts as the company tightened its grip on the Web search market, sending its shares up 7 percent.
Company-owned Web sites such as Google.com and Google News powered traffic growth, while foreign markets rose to 44 percent of revenue from 39 percent a year earlier as the company grew in countries such as Britain and Germany.
“Google right now seems to be running on all cylinders. They’re executing phenomenally well,” said Jay Wong, a portfolio manager at Payden & Rygel Investment Management.
Net income for the third quarter rose to $733.4 million, or $2.36 per diluted share, from the year-earlier quarter’s $381.2 million, or $1.32 per share. Analysts had been looking for a net profit, on average, of $2.13 per share, according to Reuters Estimates.
Gross revenue rose 70 percent to $2.69 billion, topping the average Wall Street forecast of $2.62 billion, according to Reuters Estimates. Forecasts had ranged between $2.48 billion and $2.76 billion.
Excluding traffic acquisition costs of $825 million, the financial cut that affiliated Web sites receive for featuring Google advertising, revenue rose to $1.87 billion.
“It was a clean beat quarter,” said Tim Boyd, an analyst with Caris & Co. “The stock should be going up from here.”
Shares of Google rose to $457.34, a gain of 7.3 percent, in composite Nasdaq trade on Thursday.
After a lackluster 2006 first half, the stock is up 10 percent in the year to date. It hit an all-time high on January 11 of $475.11. The consensus target on Google shares is $499.20 among 25 financial analysts surveyed by Reuters Estimates.
Google-owned Web sites generated revenue of $1.63 billion, or an 84 percent increase from $885 million in the third quarter of 2005. Google earned 60 percent of its total revenue from its own sites, versus 56 percent a year earlier.
Revenue from affiliated Web sites using Google’s AdSense programs accounted for 39 percent of revenue, or $1.04 billion, a 54 percent rise over year-earlier revenue of $675 million.
Google’s growth rate is two to three times faster than its Internet peers: eBay Inc. at 31 percent and Yahoo Inc. at 19 percent and major software rival Microsoft Corp., which has revenues growing at about 10 percent.
“They are stealing share, which was expected for Google versus Yahoo, in paid search,” Global Crown Capital analyst Martin Pyykkonen said. “Google’s on full throttle.”
Google led the U.S. Web search market with 44.1 percent in August, according to audience measurement firm comScore. Google’s global Web search market share is upward of 60 percent, but it has struggled in key Asian markets.
As of August, Google had gained 6.8 percentage points in U.S. Web search market share in the past year. Its closest rival, Yahoo, lost 1.0 percentage point, a September comScore report showed. Yahoo plans to introduce a long-awaited competitive response to Google’s Web advertising system early next year.
Third-quarter net profit included $100 million in stock-based compensation charges versus $46 million in option expense charges in the year-earlier quarter.
Fuente: Reuters, Eric Auchard