Google astounds market with £215m profit
Global giant Google has exceeded Wall Street expectations by announcing a sevenfold leap in third quarter profits.
The search engine reported net income of $381.2m (£214.9m), more than six times higher than the previous year. Profit before tax soared to $550m compared to $15m at the same period in 2004, on a 96 per cent leap in sales to $1.6bn. Google chief executive Eric Schmidt said: “Although this is typically a slower season for internet properties, we had another exceptional quarter. Our focus on end users and on quality of information and advertising worldwide continues to work extremely well.”
The results match those of Yahoo, which reported profits and sales that topped analysts’ estimates on Wednesday. Google users are growing at about twice the pace of Yahoo, as the company expands beyond internet searching. The addition of a third advertiser slot has helped boost revenue. The launch of new features on its search engine like maps and instant messaging has attracted users and has driven sales.
Adjusting for special items, Google shares are valued at 42 times next year’s estimated profits, matching rival Yahoo, but more than twice exceeding the valuation level of the S&P index. Google, Yahoo, Microsoft’s MSN and Time Warner’s AOL are all battling for users to help tap the growing amount spent by companies on internet advertising.
The company’s share price is up 339 per cent since its float 14 months ago.