Google profit rises 32% in quarter
Google Inc. said third-quarter profit increased as businesses spent more on advertising for online consumers.
Net income rose 32 percent to $2.17 billion, or $6.72 a share, from $1.64 billion, or $5.13, a year earlier, Google said. Profit excluding some items was $7.64 a share, compared with the $6.68 average of projections compiled by Bloomberg.
Google, even amid a sluggish rebound in U.S. economic growth, is benefitting from increased spending on search-based ads as it pursues opportunities in mobile communications and display advertising. Online spending is expected to account for 15 percent of total U.S. advertising this year, up from 12 percent in 2008, according to EMarketer Inc. in New York.
“We’re going to see continued growth regardless of how the economy is doing,” said Richard Fetyko, an analyst at Merriman Curhan Ford & Co. in New York, who recommends buying the stock and doesn’t own it. “Mobile and display advertising are probably adding tens of millions in terms of revenue on a sequential basis -- which starts to matter and add up.”
Google, based in Mountain View, California, climbed 6.2 percent in late trading to $574.55, after falling $2.37 to $540.93 at 4 p.m. in Nasdaq Stock Market trading. The shares have dropped 13 percent this year.
After three months of losses, Google boosted its U.S. search market share in September to 66.1 percent from 65.4 percent a month earlier, according to researcher ComScore Inc. in Reston, Virginia. The gains came after Google unveiled its Instant service that gives users search results as they type in their queries.
Yahoo Inc. fell to 16.7 percent from 17.4 percent, and third-place Microsoft Corp. edged up to 11.2 percent from 11.1 percent. Microsoft, based in Redmond, Washington, is merging its search operations with Yahoo this year to challenge Google’s dominance. Under the deal, Microsoft is providing its Bing search technology for Sunnyvale, California-based Yahoo’s sites.
Search-based advertising is the biggest piece of the U.S. Internet market, making up almost 49 percent of total online ad spending in 2010, according to EMarketer. Advertisers are expected to spend $12.4 billion on search advertisements, up from $10.7 billion in 2009.
Aiming to get an edge on Google, Microsoft said yesterday it would further integrate with Facebook Inc., owner of the world’s most popular online social network. The new features will let people automatically see what their Facebook friends think about topics they’re searching on through Bing.
Google is seeking new revenue streams, including searches on mobile phones. Its Android software has surged in popularity among consumers, overtaking Research In Motion Ltd.’s BlackBerry to become the top smartphone operating system in the U.S. in the second quarter, according to research firm Gartner Inc.
Display advertising at Google is growing as its YouTube video-watching service attracts more marketers. The company said in May it had boosted the number of display advertisers 10-fold on YouTube.
