Google profit beats forecasts, shares jump
SAN FRANCISCO (Reuters) - Google on Thursday posted a better-than-expected profit, defying fears the company is facing an Internet advertising slowdown and sending its shares past the $500 mark in extended trade.
The Web search leader, one of the hottest technology stocks of 2007, had seen its shares erase last year's 50 percent gain since the start of 2008 on investor concerns that the online ad industry was maturing and vulnerable to a U.S. economic downturn.
"It's a good time to be a Google bull," said Colin Gillis, an analyst with Canaccord Adams. "The boys delivered."
On Thursday, the company said first-quarter net income rose to $1.31 billion, or $4.12 per diluted share, from $1 billion, or $3.18 per share, in the year-earlier quarter.
Excluding one-time items and stock option expenses, profit was $4.84 a share, ahead of the average Wall Street forecast of $4.53 per share as compiled by Reuters Estimates.
Gross revenue rose 42 percent to $5.19 billion. By contrast, Google's revenue grew at a 63 percent rate in the same quarter a year ago.
Revenue had been expected, on average, to grow 40 percent to $5.13 billion, according to Reuters Estimates.
Traffic acquisition costs -- the cut of advertising revenue Google pays out to affiliated sites that run its ads -- amounted to 29 percent of ad revenue in the first quarter. A year ago, the proportion was 31 percent.
In addition to its own site, Google supplies Web search advertising to partners ranging from Time Warner Inc's AOL and IAC InterActiveCorp's Ask.com to News Corp's MySpace.
Google shares shot up as much as 11.5 percent to $501 in extended trading from its close of $449.54 on the Nasdaq earlier on Thursday.
(Reporting by Eric Auchard and Michele Gershberg in New York; Editing by Braden Reddall)
