Saturday, October 17, 2009

US economic rebound by Google profit and click signals...

Pin It UPDATE: Jay Miller GOOGLE posted a 27 per cent rise in third-quarter earnings as the internet company provided

further evidence of an awakening economy by reporting that consumers clicked on more search ads and that advertisers were paying more to place their ads.
"While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future," Google chief executive Eric Schmidt said.
Later, Mr Schmidt said Google was open to making large and small strategic acquisitions.
"We're open for business, making strategic acquisitions, both large and small," he told analysts on a conference call.
Mr Schmidt had previously said the company was once again in a buying mood, but his earlier comments seemed to downplay the prospect that Google would be willing to consider large deals.

Schmidt noted that Google has typically bought small companies that weren't very expensive but deliver a specific technology. He added that Google has looked at a number of companies with innovative search technologies, as well as a handful of start-ups that have figured out better ways of sorting and working on display ads.

He also said Google was looking at making acquisitions that would improve its enterprise business, its Chrome products and its Android mobile platform.

"We're certainly looking for larger businesses to buy, but in those cases there would have to be some specific - some major, major user base that we do not currently have access to, and so they are going to be quite infrequent," he added.

Quarterly results from Google surpassed Wall Street expectations and lifted the stock -- already up 72 per cent year to date -- another 2.9 per cent in after-hours trading to $US544.55. The stock hit a 52-week high earlier at $US536.90.

Colin Gillis, analyst at Brigantine Advisors, called the results "fantastic".

"That’s the kind of quarter the bulls wanted. We know they have been reducing costs, now we're seeing them grow the bottom line," Mr Gillis said.

For the quarter ended September 30, Google reported earnings of $US1.64 billion ($1.8bn), or $US5.13 a share, up from $US1.29bn, or $US4.06 a share, a year ago. Excluding stock-based compensation, the figure rose to $US5.89, beating the average analyst estimate of $US5.42 on Thomson Reuters.

Revenue rose 7.3 per cent to $US5.94bn. Excluding traffic-acquisition costs, or the commissions paid to marketing partners, which totalled 27 per cent of advertising revenue, revenue was $US4.38bn, above the Thomson Reuters estimate of $US4.24bn.

Piper Jaffray analyst Gene Munster said revenue growth of 7 per cent topped even the most optimistic whisper numbers, which pointed to 5-6 per cent revenue growth.

Google's US paid clicks -- a measure of how frequently consumers clicked on its ads -- surged 14 per cent from a year earlier and were up 4 per cent from the second quarter. Paid clicks had been pressured lately by the economy, falling 2 per cent sequentially in the second quarter.

Costs per click, or the amount an advertiser pays each time a user clicks on an ad, fell 6 per cent from a year earlier but rose 5 per cent from the previous quarter.

The analysts said the sequential increase in cost per clicks was a signal that the economy was rebounding.
Additional reporting: Scott Morrison


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