google posts better than expected results...

TP Comment: It could prove to be a good night on the DOW this evening, and therefore a good Monday for the Australian bourse! - Pie
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Source: www.news.com.au/business (breaking news)

Google posts better-than-expected results
By Eric Auchard in New York
April 18, 2008 09:40am
Article from: Reuters

GOOGLE posted a better-than-expected quarterly profit overnight, defying fears that it faces an online advertising slump and that a US economic slowdown would undermine its business.
Google's hard-hit shares surged 18 per cent to top $US500 ($532.59) -- a level last seen in February -- as the company showed signs of better cost control and earned more revenue abroad than at home for the first time, partly because of the weak dollar.

"It's a good time to be a Google bull," said Colin Gillis, an analyst with Canaccord Adams. "The boys delivered."

Google, one of the hottest technology stocks of 2007, had seen its shares erase last year's 50 per cent gain since the start of 2008 on investor concerns that the online ad industry was maturing and vulnerable to a US economic downturn.

"It's clear to us that we're well positioned for 2008 and beyond, regardless of the business environment that we find ourselves surrounded by," chairman and chief executive Eric Schmidt told investors.

First-quarter net income rose to $US1.31 billion ($1.4 billion), or $US4.12 per diluted share, from $US1 billion ($1.07 billion), or $US3.18 per share, a year earlier. Excluding one-time items and stock option expenses, profit was $US4.84 per share, comfortably ahead of the average Wall Street forecast of $US4.53 on Reuters Estimates.

Gross revenue rose 42 per cent to $US5.19 billion ($5.53 billion), just ahead of Wall Street targets. By contrast, Google's revenue grew at a 63 per cent rate in the same quarter a year ago.

International revenue accounted for 51 per cent of the total, surpassing US revenue for the first time and powering the company's results.

Google's performance may strengthen Yahoo in its efforts to wring a higher takeover offer from would-be buyer Microsoft.

"This signals that the online advertising market is still healthy, which should help Yahoo get a better price for its company if it does decide to sell to Microsoft," said Peter Dunay, chief investment strategist at broker-dealer Meridian Equity Partners.

Google's traffic acquisition costs -- the cut of advertising revenue paid out to affiliated sites that run its ads -- amounted to 29 per cent of ad revenue in the first quarter. A year ago, the proportion was 31 per cent.

In addition to its own site, Google supplies web search advertising to partners ranging from Time Warner's AOL and IAC InterActiveCorp's Ask.com to News Corporation's MySpace.

Google has been the subject of intense Wall Street debate over whether recent showing Google having trouble converting web searchers into ad viewers is an indication its best days of growth are behind it, or whether the company is gearing up for a new burst of growth.

Paid clicks, a measure of how often users of its web search services clicked on ads tied to the results, rose 4 per cent from the fourth quarter of 2007 and grew 20 per cent from a year ago.

By contrast, paid clicks in the first quarter of 2007 rose 52 per cent over the prior first quarter, but analysts welcomed the results.

"Clearly the area that Google was trying to focus on -- having more relevant searches -- is working," Global Crown Capital analyst Martin Pyykkonen said.

Some of the slowing growth is self-inflicted by Google. Since August, officials say they have been on a campaign to reduce clutter and low-performing ads in order to encourage consumers to click on more meaningful ads at higher rates.

Google, the dominant provider of web search and related advertising, closed a $US3.4 billion ($3.62 billion) acquisition of ad technology company DoubleClick in March. The move strengthened its position against Yahoo and Microsoft in the market for online brand advertising preferred by corporate marketers.

Google shares shot up to $US529.38 in extended trading from its close of $US449.54 on the Nasdaq earlier on Thursday.


Ends.

Cheers, Pie :-)