Google profits soar on rising advert sales

Google reeled in more internet advertising during the Christmas shopping season and approached $2bn (€1.41bn) in quarterly profit for the first time.

The fourth-quarter earnings topped analyst estimates, but revenue only matched forecasts.

Investors initially reacted with disappointment, but seemed to reconsider as they had more time to digest the results.

By early today, the company’s shares were only 40 cents below their closing price of $582.98 after initially sagging by as much as $33.98, or nearly 6%, in extended trading.

Google made $1.97bn (€1.39bn), or $6.13 (€4.33) per share, in the final three months of last year. That was up dramatically from income of $382m (€270.11m) at the same time in 2008, when Google’s earnings were deflated by charges to reflect the eroding value of some investments.

Fourth-quarter revenue totalled $6.7bn (€4.7bn), a 17% increase. The revenue was also up by more than 10% from the previous quarter, the first time Google’s sequential growth has climbed by double digits since the US recession began in December 2007.

“Given that the global economy is still in the early days of recovery, this was an extraordinary end to the year,” said Eric Schmidt, Google’s chief executive.

The quickening growth pace indicates Google is regaining the pre-recession stride that enabled the company to consistently increase its quarterly revenue by at least 30%.

Google is so large now that it will be difficult to get back to that level, but analysts still think revenue could rise by nearly 20% this year – up from 9% for all of 2009.