Tags: Google Profit Tops Estimates on Ad Demand

Google Profit Tops Estimates on Ad Demand

Friday, 21 Jan 2011 07:22 AM

Google Inc., owner of the world’s most popular search engine, said fourth-quarter profit topped analysts’ estimates as optimism about the economy led companies to boost spending for online advertising.

Co-founder Larry Page was named chief executive officer, replacing Eric Schmidt, who becomes executive chairman, the company said today in a statement.

Net income rose 29 percent to $2.54 billion, or $7.81 a share, from $1.97 billion, or $6.13, a year earlier, Google said on its website. Profit excluding some items was $8.75 a share, exceeding the $8.08 average of estimates compiled by Bloomberg.

Google benefited from its core search-engine business as advertisers stepped up efforts to reach consumers through the Internet. Spending on search-based ads rose 23 percent in the U.S. during the quarter, with gains in retail and travel, according to Efficient Frontier, which manages more than $1 billion annually in online advertising.

“The media buyers are more positive on the economy moving forward -- and they want to participate,” said Mike Hickey, an analyst at Janco Partners Inc. in Greenwood Village, Colorado. He recommends buying the stock and doesn’t own it. “The dollars are going to the Internet.”

Google, based in Mountain View, California, fell $4.98 to $626.77 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have declined 4.2 percent last year.

Sales, excluding revenue passed on to partner sites, were $6.37 billion, topping the $6.06 billion average of estimates.

Android Growth

Google, which gets most of its revenue by selling ads in its search business, is also gaining ground in the mobile-device market with its Android smartphone software.

Android topped Apple Inc.’s iPhone in U.S. smartphone subscribers for the first time in November, accounting for 26 percent of the market, compared with 25 percent for Apple, according to ComScore Inc. BlackBerry maker Research In Motion Ltd. had the top spot with 33.5 percent.

While Google doesn’t charge for Android, it’s helping the company expand mobile-advertising sales. Google was projected to grab 59 percent of the U.S. mobile-ad market last year, according to research firm IDC. Google benefitted from its May 2010 acquisition of AdMob, which had 8.4 percent of the market in 2009.

In October the company said it expects to exceed $1 billion in annual mobile-ad sales and $2.5 billion in display-ad revenue. The company noted there could be overlap between the businesses’ sales.

Google is maintaining its leadership in the search-engine business even as it faces a stronger challenge from rivals Yahoo! Inc. and Microsoft Corp. In August, Yahoo began using Microsoft’s Bing technology to provide online search results.

Google grabbed 66.6 percent of searches in the U.S. in December, up from 66.2 percent in the previous month. Combined, Microsoft and Yahoo had 28 percent, down from 28.2 percent, according to ComScore.

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Google Inc., owner of the world s most popular search engine, said fourth-quarter profit topped analysts estimates as optimism about the economy led companies to boost spending for online advertising.Co-founder Larry Page was named chief executive officer, replacing Eric...
Google Profit Tops Estimates on Ad Demand
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2011-22-21
Friday, 21 Jan 2011 07:22 AM
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