Google’s profits soar 60 percent in quarter

first_img AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREOregon Ducks football players get stuck on Disney ride during Rose Bowl eventAfter subtracting the commissions that the company pays to thousands of advertising partners, Google’s revenue totaled $1.53 billion. Google’s profit increase would have been even larger if not for new accounting rules that require companies to deduct the costs of their employee stock options. That requirement, imposed over the high-tech industry’s loud objections, wasn’t in effect last year. If not for the stock option expenses and a charge for a recently announced legal settlement, Google would have earned $2.29 per share. That blew past the average estimate of $1.97 per share among analysts surveyed by Thomson Financial. Google’s revenue, excluding ad commissions, exceeded the average analyst estimate by $90 million. The company released the results after the stock market closed. Google shares gained $4.50 to finish at $415 on the Nasdaq Stock Market, then climbed $29.89, or 7.2 percent, in extended trading. SAN FRANCISCO – Google Inc.’s first-quarter profit rose 60 percent, soaring past analyst estimates as the company’s Internet-leading search engine solidified its position as the Web’s most popular advertising vehicle. The report sent Google shares rising more than 7 percent in late trading. The Mountain View-based company said Thursday that it earned $592.3 million, or $1.95 per share, during the first three months of the year. That compared with net income of $369.2 million, or $1.29 per share, at the same time last year. Quarterly revenue surpassed $2 billion for the first time in Google’s 7 year history, reaching $2.25 billion – a 79 percent increase from $1.26 billion last year. “We are obviously very happy with our first-quarter results,” Google CEO Eric Schmidt said during a conference call with analysts. “We basically have good news across the business.” The strong showing provides another lift for Google’s stock, which has surged by more than 20 percent since its addition to the Standard & Poor’s 500 index was announced a month ago. The inclusion to the widely watched market barometer reversed the negative sentiment that had been swirling around Google after the company missed analyst earnings estimates in its previous quarter. The concerns raised by that shortfall were compounded in late February when George Reyes, Google’s chief financial officer, said it was becoming more difficult for the company to find new ways to get people to click on its ads. Google’s first-quarter performance made investors’ recent worries seem misguided. The results also appeared to validate recent research indicating that the company has been widening its search engine lead over its biggest rivals, Yahoo Inc. and Microsoft Corp. Yahoo, which runs the Internet’s second-ranked search engine, had challenged the notion that it was losing significant market share when it released its first-quarter earnings this week. But Google’s first-quarter growth outdistanced Yahoo’s by a substantial margin. Excluding ad commissions, Google’s first-quarter revenue increased 19 percent from the previous quarter while Yahoo’s inched up by just 2 percent. “It looks to us that we are currently gaining market share,” Schmidt told analysts. Data from a leading Internet research firm supports that thesis. Google ended March with a 42.7 percent share of the U.S. search engine market, up from 36.4 percent at the same time last year, according to comScore Media Metrix. Yahoo’s market share fell to 28 percent from 30.6 percent last year, comScore said, while Microsoft’s dropped to 13.2 percent from 16.5 percent. Bolstered by its success, Google is sitting on a large pile of cash that could finance acquisitions and other investments to grow even larger. The company has about $10.5 billion in the bank, including the proceeds from a recently completed sale of 5.3 million additional shares. Google already is investing heavily in the computer data centers that power its search engine and increasing array of other products. The company’s capital expenditures totaled $345 million in the first quarter, putting it on pace to invest about $1.4 billion in that area this year, up from $838 million last year.160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!last_img read more