Google Profit Beats Wall St. Forecast (uploaded in China)

By MIGUEL HELFT
Published: April 17, 2008
SAN FRANCISCO — Google said Thursday that its net income for the first three months of the year rose 31 percent on revenue growth of 42 percent from a year ago, topping estimates from Wall Street analysts.
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The company’s shares shot up in after-hours trading.
The Internet search giant said net income was 1.31 billion, or $4.12 a share, compared with $1 billion, or $3.18 a share, in the first quarter of 2007. Revenue climbed to $5.19 billion, from $3.66 billion a year earlier.
Excluding commissions paid to advertising partners, a widely followed measure, Google’s revenue was $3.7 billion, slightly higher than analysts expected. Its profit, excluding the cost of stock options, was $4.84 a share, handily beating forecasts.
On average, Wall Street analysts were expecting Google to report revenue, excluding commissions to advertising partners, of $3.61 billion and income, excluding the cost of stock options, of $4.52 a share.
“Our ongoing innovation in search, ads, and apps helped drive healthy growth globally across our product lines, yielding another strong quarter for Google,” said Eric E. Schmidt, chief executive of Google, in a news release.
Analysts have become obsessed with Google’s “paid clicks,” or the number of times users clicked on its ads. The company said there were up 20 percent from a year ago, though down from 30 percent growth rate of the previous quarter.
Google’s first-quarter report comes amid intense interest and speculation over the impact that a slowing economy may have on the Internet search giant and on the online advertising business overall.
When Google reported financial results for the fourth quarter of 2007, Mr. Schmidt, told investors that the company had seen no adverse effects on its business from a slowing economy. Google gives no guidance to investors on its expected future performance.
But simmering concerns that a slowdown would indeed affect Google, perhaps to a significant degree, boiled over in late February when comScore, the Web audience measuring firm, issued a report indicating a slight decline in paid clicks in January when compared with January 2007. Such clicks are important because Google charges an advertiser only when someone clicks on their ad. Google’s shares tumbled following the comScore report. Investors’ fears were tempered somewhat after some analysts noted that the decline in paid-clicks may have been in part self-inflicted. The analysts, as well as comScore, said that Google had taken measures to improve the usefulness of its ads. They included reducing the clickable area in text ads to avoid accidental clicks. Those improvements might have driven the price of clicks up, leaving investors to guess what effect, if any, the changes had on the company’s revenue.
Still, many analysts cut their estimates for Google’s growth. And the unease has persisted, as subsequent reports from comScore indicated that the slowing trend in paid clicks continued for the remainder of the first quarter. Google shares are down approximately 40 percent from their November peak.
During the quarter, Google completed the acquisition of DoubleClick and investors are watching what impact the advertising technology company will have Google’s revenue and profit margins.