Google Inc reaches 46 percent profit in third quarter

Google Inc.'s third-quarter profit jumped up to 46 percent that have elevated the Internet search leader's stock price by more $100 during the past month.

Photo: Google Inc reaches 46 percent profit in third quarter

The Mountain View-based company said Thursday that it earned $1.07 billion (0.75 billion EUR), or $3.38 (2.36 EUR) per share, for the three months ended in September, up from net income of $733.4 million (512.9 million EUR), or $2.36 (1.65 EUR) per share, at the same time last year.

If not for the cost of awarding stock to its steadily expanding work force, Google said it would have earned $3.91 (2.73 EUR) per share. That topped the average estimate of $3.78 (2.64 EUR) per share among analysts surveyed by Thomson Financial.

Revenue for the period totaled $4.23 billion (2.96 billion EUR), a 57 percent increase from $2.67 billion (1.87 billion EUR) last year.

After subtracting commissions paid to its thousands of advertising partners, Google's revenue stood at $3.01 billion (2.11 billion EUR) - about $70 million (48.95 million EUR) above the average analyst estimate.

The performance represented a return to form for Google after its second-quarter earnings disappointed Wall Street. The company has surpassed analyst estimates in all but two of the 13 quarters since its August 2004 initial public offering.

"We are very pleased with the impressive growth we experienced across our business," Google Chairman Eric Schmidt said.

Investors already had been counting on a stellar quarter from Google. Those assumptions contributed to a 19 percent increase in Google's stock price during the past month as the shares smashed through $600 (419.61 EUR) for the first time.

Google shares added $6.14 Thursday to finish the regular session at $639.62. The shares tacked on $6.08 more in after-hours trading. They have increased more than sevenfold from their IPO price to create an about $175 billion (122.39 billion EUR) in additional shareholder wealth.

The company is thriving because more advertisers are shifting spending to the Internet, where Google has built the most effective system to connect with prospective customers.

Although it relies on complex technology, Google's formula is fairly simple. As it processes a search request, Google also scans its database for text-based ads related to the same topic as the query and displays the commercial messages along the side and top of the results page.

Google gets paid when someone clicks on an ad on its pages or one of its partners' sites.

There's ample opportunity to display the ads because Google currently fields about 1.2 billion search requests worldwide per day, based on the latest data from comScore Inc. That's more than quadruple the number of requests handled by its next closest competitor, Yahoo Inc.

Nearly two-thirds, or $2.73 billion (1.91 billion EUR), of Google's revenue came from searches and other activity on its own Web sites.

With each passing quarter, Google is raking in more revenue from Web surfers outside the United States. During the summer, Google's international sources accounted for $2.03 billion (1.42 billion EUR), or about 48 percent of its revenue. Analysts expect Google eventually will get most of its revenue from outside the United States .

While becoming even more dominant in search, Google also is branching in new directions that are creating new ways to sell ads and opening up potential new revenue channels in the software applications market.

In the past few months, Google unveiled a way to show text-based ads across the bottom of videos supplied by its YouTube subsidiary and also began distributing ads within "widgets" - the interactive capsules that are becoming Internet staples.