- Associated Press - Thursday, July 14, 2011

SAN FRANCISCO (AP) - Google Inc. ushered in new CEO Larry Page with second-quarter earnings that were far better than analysts expected.

The results released Thursday reassured investors who had been fretting whether Google would still thrive under Page’s leadership. The Google co-founder replaced Eric Schmidt, the CEO of the previous decade, at the start of the quarter.

Wall Street wasted little time signaling its exuberance with Page’s performance. Google shares increased $54.51, or more than 10 percent, to $583.45 in extended trading after finishing the regular session at $528.94.

Google Inc. earned $2.5 billion, or $7.68 per share, in the April-June period. That’s a 36 percent increase from $1.84 billion, or $5.71 per share, a year ago.

If not for costs covering employee stock, Google says it would have earned $8.74 per share. That figured easily topped the average estimate of $7.84 per share among analysts surveyed by FactSet.

Revenue increased 32 percent to $9 billion, the first time in Google’s 13-year history that it has brought in that much money in a quarter.

After subtracting Google’s advertising commissions, revenue stood at $6.9 billion _ nearly $400 million above analyst projections.

Google fared so well because advertisers were willing to pay higher prices to promote their products on the Internet’s largest marketing network. The average price paid per advertising click on Google’s network rose 12 percent from last year. Web surfers also found the ads more enticing, clicking on them 18 percent more than they did at the same time last year.

Page delivered the impressive results even while standing by his vow to bring in more engineering talent and investing heavily in more data centers so that Google can keep expanding into new fields to make even more money in the future. Google’s newest venture, a Facebook-like social network called Plus, debuted two weeks ago and has grown quickly amid positive reviews.

Plus is off to such a good start that Page himself took the unusual step of sharing some statistics about how quickly the service is being embraced even though it still requires an invitation to join.

During some of his most extensive public remarks since becoming CEO, Page boasted that more than 10 million people already have joined Plus. By comparison, Facebook has more than 750 million users.

The usually aloof Page also tried to address worries that he has been frivolously spending money on projects that have little to do with Google’s main business of Internet search and advertising.

“We are very careful stewards of shareholder money,” he said during opening remarks that covered the first eight minutes of management’s conference call.

“I am very happy with our progress here,” Page said. “Focus and prioritization are crucial, given our amazing opportunities. Indeed, I see 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.”

To help carry out its ambitious agenda, Google increased its payroll by 9 percent, or 2,452 employees, in the quarter to bring its work force to nearly 28,800 people. The additions included 450 workers inherited as part of the company’s $700 million purchase of airline fare tracker ITA Software.

Story Continues →