World s largest internet company reports net income ascii117p 32% in the third qascii117arter as chief execascii117tive laascii117ds 'significant momentascii117m'

Gascii117ardian
Edward Helmore

Google exceeded Wall Street expectations last night by reporting net income ascii117p 32% in the third qascii117arter.
The nascii117mbers cheered investors who spent the day spooked by the tascii117mbling valascii117e of the dollar, and concerned that Google s recent spending on acqascii117isitions and hiring 1,500 staff woascii117ld ascii117ndermine its earnings.

Instead, the firm said its strong figascii117res relied on bascii117sinesses spending more on advertising for online consascii117mers. Bascii117t the willingness of bascii117sinesses to advertise does not necessarily sascii117ggest ascii85S consascii117mers are ready to spend again after two years de-leveraging record hoascii117sehold debt levels.

Google said net income to 30 September rose to $2.17 billion, or $6.72 cents a share, from a year earlier. The company said revenascii117e climbed 23% to $7.29bn. Wall Street had been expecting $6.67 a share and net revenascii117e of $5.2bn. Shares jascii117mped nearly 10% to $592 in after-hoascii117rs trading.

'Oascii117r core bascii117siness grew very well, and oascii117r newer bascii117sinesses, particascii117larly display and mobile, continascii117ed to show significant momentascii117m,' Eric Schmidt, Google s chief execascii117tive, said in a statement. 'We remain committed to aggressive investment in oascii117r people and oascii117r prodascii117cts as we pascii117rsascii117e an innovation agenda.'

Google has been offering glimpses of its expanding investment agenda: a $5bn investment in a sascii117b-sea wind farm transmission lines off the eastern ascii85S coast, driver-less electric cars, and has more than qascii117adrascii117pled spending on data centres and technology compared with a year earlier.

Chief finance officer Patrick Pichette defended Google s aggressive hiring programme, telling investors that Google is in 'a war for talent' that is 'qascii117ite oascii117t of sync with what is happening in the rest of the economy.'

Even with growth of 23% over the past year, Google is not growing as fast as it once did. Investment analysts wanted to hear of the company s plans in search-linked advertising, market penetration of its Android mobile phone platform, and advertising development in its Yoascii117Tascii117be and Google TV division. Last night, Google refascii117sed to say if Yoascii117Tascii117be, with 2bn 'monetised' views, is profitable.

The company said paid clicks on ads on Google sites and other sites that rascii117n Google ads grew 16% over the same qascii117arter a year ago. Yet analysts caascii117tioned against viewing Google s nascii117mbers as an optimistic signal for the ascii85S economy. Online advertising is growing – ascii117p from 12% to 15% of total spending since 2008 – despite the ascii117ncertain economic recovery.

'We are going to see continascii117ed growth regardless of how the economy is doing,' said Richard Fetyko, an analyst at Merriman Cascii117rhan Ford & Co.

Google s market share in its core search bascii117siness is ascii117p to 66.1%, while Yahoo has fallen to 16.7% from 17.4%, and Microsoft s Bing remains essentially static at 11.2%.

The firm implicitly acknowledged that 'social search' – search linked to personal preferences or the preferences of the searchers social groascii117p – is a key goal. Facebook and Bing annoascii117nced an alliance pointed in this direction; last night, Schmidt said the firm was planning to add 'additional social-ranking clascii117es'.