- The Washington Times - Friday, April 18, 2008

SAN FRANCISCO (AP) — Google Inc.’s first-quarter profit climbed 30 percent to surpass analysts’ predictions in a performance that alleviated some of the economic worries that have hammered the Internet search leader’s stock this year.

The news, released after the stock market closed yesterday, lifted Google’s drooping shares almost 18 percent.

The Mountain View, Calif., company said it earned $1.31 billion ($4.12 per share) during the first three months of the year. That compared with $1 billion ($3.18) in the first quarter of 2007.

If not for expenses to cover stock provided to its employees, Google said it would have made $4.84 per share.

That figure outstripped the average projection of $4.52 per share among analysts surveyed by Thomson Financial.

“It’s clear we are well positioned for 2008 and beyond, regardless of the business environment we are surrounded by,” Google Chief Executive Eric Schmidt told analysts yesterday during a conference call.

Investors had serious doubts about Google’s short-term prospects — before yesterday. Google shares soared $79.64 in extended trading yesterday after declining $5.49 to finish the regular session at $449.54.

The financial targets that guide Wall Street’s expectations had fallen during the past two months as Web-surfing data convinced analysts that fewer people have been clicking on Google’s links to advertising amid mounting evidence the U.S. economy has tumbled into a recession. Google makes money from the links only when Web surfers click on them.

Google’s showing indicates the Internet’s advertising market remains robust, especially outside the United States. International markets accounted for more than half of Google’s revenue in an expansion that was accentuated by the weak dollar.

First-quarter revenue totaled $5.19 billion, up 42 percent from $3.66 billion a year ago.

After subtracting the commissions paid to the company’s advertising partners, Google’s revenue stood at $3.7 billion — about $100 million above analyst estimates.

Google said its revenue would have been about $202 million lower if the dollar’s value hadn’t declined so dramatically from the first quarter of 2007.

An unusually low tax rate of 24 percent also bolstered Google’s earnings. The company’s quarterly tax rate ranged from 25 percent to 27 percent last year. Management attributed this year’s lower rate primarily to its widening exposure to markets outside the United States.

The results restored some of the $75 billion in shareholder wealth that had evaporated with the 35 percent drop in Google’s stock price this year.


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