Google reports strong profit growth
Net income rose 32% to €1.54 billion ($2.17 billion), or $6.72 a share, from $1.64 billion, or $5.13, a year earlier, Google said on its website. Profit excluding some items was $7.64 a share, compared with the $6.68 average of projections compiled by Bloomberg.
Google, even amid a sluggish rebound in US economic growth, is benefiting from increased spending on search-based ads as it pursues opportunities in mobile communications and display advertising. Online spending is expected to account for 15% of total US advertising this year, up from 12% in 2008, according to EMarketer Inc. in New York.
“We’re going to see continued growth regardless of how the economy is doing,” said Richard Fetyko, an analyst at Merriman Curhan Ford & Co. in New York, who recommends buying the stock and doesn’t own it. “Mobile and display advertising are probably adding tens of millions in terms of revenue on a sequential basis — which starts to matter and add up.”
Google, based in Mountain View, California, climbed 6.2% in late trading to $574.55, after falling $2.37 to $540.93 at 4 p.m. in Nasdaq trading. The shares have dropped 13% this year.
After three months of losses, Google boosted its US search market share in September to 66.1% from 65.4% a month earlier, according to researcher ComScore Inc. in Reston, Virginia. The gains came after Google unveiled its Instant service that gives users search results as they type in their queries.
Yahoo! Inc. fell to 16.7% from 17.4%, and third-place Microsoft Corp. edged up to 11.2% from 11.1%. Microsoft, based in Redmond, Washington, is merging its search operations with Yahoo this year to challenge Google’s dominance.
Search-based advertising is the biggest piece of the US internet market, making up almost 49% of total online ad spending in 2010, according to EMarketer.
Advertisers are expected to spend $12.4 billion on search advertisements, up from $10.7 billion in 2009.
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