Google inc. (NASDAQ: GOOG) smashed the earnings estimates after reporting its third quarter results after the close of the market. Earnings came in at $6.72 per share easily decimating the analyst forecast of $6.67 per share. This was equivalent to $2.17 billion in net income, which has increase 32% on a year-over-year basis.
Google's average cost per click, which determines how much Google and its partners receive for their advertising, soared as well. The company is "improving the ad formats" said Jonathan Rosenberg, Senior Vice President of Product Management, which is helping to increase the number of clicks. Google AdSense revenue was up to $2.2 billion. Rosenberg also commented that the new Google Instant, which allows users to get search results as they type, did not help revenue so much, but was intended to help the user. "[F]rom a resource standpoint, it's actually pretty expensive," he said.
It is interesting to note that U.S. revenue was up 26% year over year, but international revenue accounted for 52% of the total revenue, coming in at $2.8 billion. Google also cited increasing momentum in small businesses.
"Google had an excellent quarter. Our core business grew very well, and our newer businesses - particularly display and mobile - continued to show significant momentum." Said Google CEO Eric Schmidt. The company holds $33 billion of cash and equivalents.
Rosenberg continued to talk about 3 things: Display ads came in at a $2.5 billion annualized run rate, which includes ads from YouTube, DoubleClick, and non-text ads; YouTube is monetizing over 2 billion views per week which is up 50% year-over-year. Google is trying new TrueView ads on YouTube, where viewers can select which commercials they would like to watch and advertisers only paying for the selected ads; and lastly, Mobile views of Google's ads is on an annualized run rate of $1 billion. This means they would add $1 billion annually to Google's revenue streams.
With regards to Android, Eric Schmidt commented that people who use Android phones search twice as much, and the searches are more lucrative. Therefore it is quite profitable for Google, who essentially gives the open source operating system away for free.
"Google is taking market share with Android, and fast" Said co-CEO of The Markets Are Open, Allan Edwards. "I would have liked to buy some after hearing this incredible conference call. I'm ecstatic that cost per click advertising is up."
Google Inc. rose 9.07% or $49.07 in after hours trading, to $590.00.
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