July 21, 2005 2:26 PM PDT

Google second-quarter profit jumps on ad growth

Search engine giant Google's second-quarter profit jumped more than 300 percent, driven by continued growth in Web advertising.

The Internet bellwether on Thursday posted a net income of $342.8 million, or $1.19 a share, on total revenue of $1.38 billion for the three months ended June 30.

That compares with a net income of $79 million, or 30 cents a share, on revenue of $700 million in the same period a year earlier.

Excluding $494 million in traffic acquisition costs, the portion of revenue shared with partners, Google posted revenue of $890 million, beating analyst estimates.

Analysts, on average, had expected Google to post earnings per share of $1.21, excluding stock-based compensation, on revenue of $842 million, excluding traffic acquisition costs, according to a Thomson Financial survey. Excluding stock option compensation, Google's earnings per share would have been between $1.29 and $1.35.

Google shares were down $18.14 to $295.80 in after-hours trading after closing at $313.94.

"The combination of high expectations going into the quarter and cautionary comments from management about the next quarter" may have pushed the stock down after hours, said David Edwards, an analyst at American Technology Research. The company, as a matter of policy, does not provide financial guidance, but "they were clearly providing cautionary commentary," he said.

On a conference call with analysts, Google Chief Financial Officer George Reyes warned that third-quarter results might be weaker than the second quarter because Web surfing decreases during August summer vacations in Europe.

Executives were clearly upbeat about the most recent quarter, however. "We are very proud of our results. Business is very good here at Google," said Chief Executive Eric Schmidt. "It's really because we've figured out ways to stay focused on end users and innovation."

Nearly all of Google's revenue comes from advertisements that appear on search results pages and on partner sites. The company also has rolled out a bevy of new products and services to expand its Web search leadership, like Google maps and localized and video search.

The Mountain View, Calif.-based company has had three blow-out quarters since going public last year, each time beating analyst estimates and each time followed by a rise in the stock in after-hours trading.

Google posted a first-quarter profit in April that was almost six times higher than a year earlier. In February, the company's fourth-quarter profit rose more than 100 percent year over year. Last October, the company's third-quarter profit more than doubled.

Meanwhile, Google's share price has skyrocketed, reaching a peak at above $300 a share for the first time last month, making it the world's biggest media group by stock market value.

Google's reach continues to grow. The search giant attracted more than 78.5 million U.S. visitors last month, up 25 percent from a year ago, while the Google and Blogger brands ranked No. 1 in search and Web hosting, respectively, according to recent figures from Nielsen/NetRatings.

WebSideStory says Google accounted for more than 52 percent of the U.S. search traffic in early June, while Nielsen/NetRatings puts its share at 47 percent for June, compared with Yahoo's 22 percent.

On Tuesday, Google's chief rival, Yahoo, posted a higher second-quarter profit, but its revenue fell short of analyst expectations. The news sent Yahoo shares down as much as 10 percent in after-hours trading. If not for the sale of an investment that some reports speculated was Google stock, Yahoo would have posted a net profit of 13 cents a share instead of 51 cents a share.

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Diversify
Relying on search revenue is putting all their eggs into one basket. They need to diverify. They could bring out a google box. A cheap PC running Linux and Firefox. All the apps could run in the browser. A webservices box more intuitive than Windows shouldn't be that hard to make with the available Open Source code out there. With Google branding and speedy apps, it would probably sell quite well for the masses who use computers for the Web, Email, IM, and plugging in their digital camera.
Posted by t8 (3716 comments )
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Search with AnooX and share in Ad revenues
Isnt that great, Google just had a Billion dollars in revenue while you the people who searched using Google and thus made it possible for Google to have this revenue got a big fat ZERO dollar of this revenue which you helped to generate.
Well now you can do something about this: AnooX search engine is revolutionizing the search engine business by sharing with its search users Advertising revenues that it generates. Imagine that you search with Google & Yahoo! and they make all the money, you search with AnooX and you make money too. For more info go here:
<a class="jive-link-external" href="http://www.anoox.com/paid4search-overview.jsp" target="_newWindow">http://www.anoox.com/paid4search-overview.jsp</a>
Posted by Info_Max (52 comments )
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