Google Regains Its Crown - Forbes.com
What online ad slump?
Worries that Google (nasdaq: GOOG - news - people ) was losing its edge were dispelled when the tech giant reported surprisingly strong first-quarter earnings after the bell on Thursday, buoyed by favorable exchange rates and strong international sales.
Wall Street feared that the turmoil in the economy was taking its toll on Google's blockbuster advertising machine, with data from comScore showing that the number of clicks on ads hosted on Google's site had been declining since January. (See " Google In The Hot Seat")
But Google reported aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of its partners, increased approximately 20.0% over the first quarter of 2007 and approximately 4.0% over the fourth quarter of 2007.
“Our ongoing innovation in search, ads, and apps helped drive healthy growth globally across our product lines, yielding another strong quarter for Google,” said Chief Executive Eric Schmidt. “As we integrate DoubleClick into our advertising platform, we see exciting new ways to improve the user experience and increase value for our advertisers and partners.”
Google acquired DoubleClick, an Internet advertising company, on March 11.
Google's first-quarter net income soared 31% to $1.3 billion, or $4.12 per diluted share, from $1.0 billion, or $3.18 cents a share, in the prior year. Excluding one-time items and stock option expenses, profit was $4.84 a share, a whopping 32 cents above the consensus estimate of analysts polled by Thomson Financial.
Gross revenue rose 42.0% to $5.2 billion in the quarter, up from $3.7 billion in the prior year. Analysts predicted revenue of $5.1 billion.
Wall Street started worrying about Google's growth last quarter, when it missed analysts' earnings estimates by a penny, despite posting a 17% jump in total earnings for the quarter. In its fourth-quarter earnings call, Eric Schmidt said Google's earnings were hampered by improvements to its search engine aimed at weeding out junk ads that pop up alongside search results. He dismissed suggestions that the slowing economy was to blame for Google's lackluster results.
Declining clicks and missed earnings prompted many analysts to lower their first-quarter estimates by 12 cents a share on average.
Were they ever wrong. Google shares rocketed 17.5% in after-hours trade, rising $78.94 to $528.48.
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