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Google posts record quarterly earnings

Google shares surged more than 12 percent in late trade Thursday after the Internet search giant released record earnings and announced that 10 million people had joined its new social network.

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Google co-founder Larry Page in Las Vegas, Nevada, 2006. Google's newest project Google+ has caused a surge in the company's shares over 12 percent in late trade as the social network has 10 million users within the first two weeks. (Ethan Miller/AFP/Getty Images)

Google shares surged more than 12 percent in late trade Thursday after the Internet search giant released record earnings and announced that 10 million people had joined its new social network.

Profit in the second quarter leapt 36 percent to $2.51 billion on record-high revenue of $9 billion, which was up 32 percent year-on-year, the company said.

Co-founder and Chief Executive Larry Page, who took over Google in April, said the company's new social network, Google+, a rival to Facebook, had more than 10 million users after just two weeks as an invite-only service.

The Wall Street Journal reported that his comments appeared to be aimed at showing the Web company can compete with the new crop of Internet firms such as Facebook.

He said he saw "more opportunities for Google today than ever before, because, believe it or not, we are still in the very early stages of what we want to do."

Google's investments in its Android mobile-device software and the Chrome Web browser will "generate huge new businesses for Google in the long run, just like search."

The company's stock prices jumped more than $60 to $595.80 in after-hours trading following the earnings announcement.

"If you look at the arsenal we are building it is really quite formidable," Goggle chief financial officer Patrick Pichette said in reference Google+, YouTube, Android.

A little over half the company's revenue, or $4.87 billion, came from outside the United States, while paid clicks on Internet ads rose 18 percent compared to the same period last year.

But the California-based company's costs were on the rise as it seeks to compete with newer rivals such as Facebook.

Operating expenses in the quarter hit $2.97 billion compared to $1.99 billion at the same time last year. Capital expenditures such as maintaining servers and other hardware were $917 million in the first quarter, up from $476 million a year earlier.

The earnings figures gave a welcome boost to a stock that had slipped 11 percent this year and "traded as if it were a slow-moving incumbent" rather than a glamorous trend-setter, the Wall Street Journal said.

Some analysts say the dichotomy is justified, and the growth of Facebook in particular could come at Google's expense. In addition, new U.S. antitrust scrutiny of Google could make it harder for the company to show it won't be a slow-growth cash machine like software giant Microsoft Corp.

"People think these newer entities coming out now are recession-tested and have much higher growth profiles than Google over the next three years," said Mark Mahaney, an Internet analyst at Citigroup Inc. who downgraded Google's stock to "hold" from "buy" several months ago. Google's recent share price is an indication that to some investors the company has become "Microsoft Version 2.0," he said.

Bloomberg reported that the company's sales figures beat projections, indicating it is making progress expanding beyond search advertising.

"Google is a real-time indicator in terms of the broader economy; this is a good sign," said Gene Munster, an analyst at Piper Jaffray Cos.

http://www.globalpost.com/dispatch/news/business-tech/technology-news/110715/google-earnings-profit-shares-company-results