Google on Thursday reported that its quarterly profit soared on the back of its thriving Internet advertising service and that its display and mobile ad businesses were taking wing.
A 32 percent leap in net profit to US$2.17 billion and a 23 percent surge in revenue to US$7.29 billion trumped Wall Street expectations for the California firm in the quarter that ended Sept. 30.
Google shares rose 8.98 percent to US$589.50 in after-hours trading.
Photo: Bloomberg
“Google had an excellent quarter,” CEO Eric Schmidt said.
“Our core business grew very well, and our newer businesses — particularly display and mobile — continued to show significant momentum,” he said.
Google executives were eager to show that the Internet giant can pump money from more than just text ads posted with search results and offered a rare glimpse into the revenue breakdown in an earnings call with press and analysts.
Google is on track this year to take in US$2.5 billion from display advertising and more than US$1 billion from ads on mobile devices, senior vice president of product management Jonathan Rosenberg said.
Display ads are essentially online billboards as opposed to promotional links served up with search results. Google is chasing Facebook and Yahoo in the display ad business and is expected to have a 6 percent share of a US market that should total US$8.6 billion this year, according to eMarketer.
Facebook and Yahoo account for 9.7 percent and 15.3 percent of the US display ad market respectively, eMarketer reported.
The Google-backed Android software platform for mobile phones has been a “phenomenal success” and the handsets are used heavily for searching the Internet, Schmidt said.
Search remains the core of Google’s business, Rosenberg said.
“Search is still the most monetizable moment on the Internet,” he said. “As search gets better, our ads have to keep up.”
Google is planning to tap into the power of people’s online social connections to make Internet searches more rewarding, Schmidt said.
“Fundamentally, we want to make search more personal,” Schmidt said. “As we get more information about who your friends are we can make the search that much better.”
Facebook and Microsoft began personalizing Internet queries on Wednesday, letting people add the recommendations of friends at the social network to Bing search results.
Google’s share of the core US search market grew to 66.1 percent last month, evidently due to a new “Instant” feature that delivers suggested results with each query letter typed, according to industry tracker comScore.
Microsoft’s portion of the market improved a fraction to 11.2 percent, while that of Yahoo slipped from 17.4 percent in August to 16.7 last month, comScore reported on Wednesday.
Google said it was ramping up hiring efforts in a “war” over top technology industry talent.
“We stepped up our hiring machine,” Google chief financial officer Patrick Pichette said. “The difference between winners and losers will be based on who we can attract and retain.”
Google was being “generous but frugal” in its hiring tactics, Pichette added to fend off concerns that profits might suffer under the weight of rising employee expenses.
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