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Google Q3 profits jump 46 percent

Google Inc rode the Internet advertising wave to another sparkling quarter, justifying the investor confidence that lifted its stock price by more than US$100 during the past month to establish the online search leader as Silicon Valley's most valuable company.

Overcoming a traditionally slow season for Web surfing, Google said on Thursday that it earned US$1.07 billion, or US$3.38 per share, for the three months ended in September. That was a 46 percent improvement from a net income of US$733.4 million, or US$2.36 per share, at the same time last year.

If not for the cost of awarding stock to its steadily expanding work force, Google said it would have earned US$3.91 per share. That topped the average estimate of US$3.78 per share among analysts surveyed by Thomson Financial.

Revenue for the period totaled U$4.23 billion, a 57 percent increase from US$2.67 billion last year.

After subtracting commissions paid to its thousands of advertising partners, Google's revenue stood at US$3.01 billion -- about US$70 million above the average analyst estimate.

The performance represented a return to form for Google after its second-quarter earnings disappointed Wall Street. The firm has surpassed analyst estimates in all but two of the 13 quarters since its August 2004 initial public offering.

"We're strong and getting stronger," Google chairman Eric Schmidt said in an interview on Thursday. "What I am most pleased about is our model works."

Wall Street already had been counting on a stellar quarter from Google, especially after its smaller rival, Yahoo Inc, beat analyst expectations with its third-quarter earnings released earlier this week.

The enormous expectations contributed to a 19 percent increase in Google's stock price during the past month, propelling shares through US$600 for the first time.

Google shares added US$6.14 on Thursday to finish the regular session at US$639.62, leaving the nine-year-old company with a market value of just below US$200 billion. That enabled Google to edge past Cisco Systems Inc as Silicon Valley's most valuable company.

After the third-quarter results came out, Google shares rose US$7.38 in after-hours trading.

Google is thriving because advertising that once went to television, radio and newspapers is shifting to the Internet, where Google's search engine steers a highly effective system for finding prospective customers.

While becoming even more dominant in search, Google also is branching in new directions that are creating new ways to sell ads and opening up potential new revenue channels in the software applications market.

In the past few months, Google unveiled a way to show text-based ads across the bottom of videos supplied by its YouTube subsidiary and also began distributing ads within "widgets" -- the interactive capsules that are becoming Internet staples.
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