Google 3Q Profits Surge 92%

Another expectation-defying quarter from Google.

Google Inc. reported late Thursday third-quarter profit rose 92% on another strong surge in revenue from the ads it places next to Internet search results. The report sent Google shares climbing in after-hours trading.

The No. 1 search provider said profit for the quarter ended September 30 rose to $733 million, or $2.36 a share, from $381 million, or $1.32 a share, a year ago.

Sales rose 70% to $2.69 billion as more businesses paid to place ads on Google's own sites and those of its partners. Excluding the payments Google makes to acquire Internet traffic, sales rose about 79% to $1.86 billion.

Even so, there will be a group of investors who point to the blowout numbers as proof of a slowdown in Google's core business—online advertising. Instead of growing 96% (as it did between Q3 F04 and Q3 F05), revenues grew only 70%, year-on-year.

We should all have such problems.

I'd especially like the problem of being the US search engine, accounting for half the searches made by people (around twice as many searches as my next-nearest competitor, Yahoo!).

While legacy portals like Yahoo!, MSN, and AOL attempt to build their old businesses based on exclusive content destinations (while simultaneously investing in search), Google's racing past them with the perfect business model in a world of pieces, loosely joined. Google's a destination, but a transient one: it's a broker, a way station, on the road to the information people want. They recognize that, on an ever-expanding network of useful information, their ability to match people and content is far more valuable than any temporary Big Content hookup the portals can arrange with Hollywood.


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