Google More Than Doubles Profits

Google announced its financial results for its first quarter as a public company after the bell on Thursday, reporting net income of $52 million, or $0.19 per share. The company more than doubled the $20.4 million, or $0.08 per share it saw in the same quarter last year.

“We told potential investors from the start that Google is an unconventional company in many ways,” said CEO Eric Schmidt. “We made it explicitly clear that we expect to deliver the best results, strongest operational performance, and the most consistent execution, focused strictly on the long term. Though we’re optimized for long-term performance, let me be first to say we are very pleased with the short run.”

Google paid $201 million to Yahoo to settle patent disputes. Without this charge, Google would have realized net income of $125 million, or $0.45 per share. Analysts’ estimates for the quarter ranged widely, from 22 cents to 61 cents a share, according to Thomson First Call.

Revenue in the quarter totaled $805.9 million, up 15 percent over the second quarter of 2004, and up 105 percent year-over-year. Just over half of that, $411.7 million, was generated on Google-owned sites. Revenue from AdSense programs on partner sites contributed $384.3 million, or 48 percent, of total revenue.

Google shared 79 percent of Google Network revenue with its partners, paying out $302.9 million to AdSense partners, compared with $143.5 million a year ago, which comprised 82 percent of Google Network revenue. The drop in percentage of total revenue these traffic acquisition costs represent results from more revenue coming from partners with lower revenue-sharing agreements, Schmidt said.

“We want to send most of the revenue to publishers, to make it attractive and worthwhile for them,” added Sergei Brin, Google’s co-founder and president of technology. “One of Google’s strengths is our robust advertising network.”

The company launched several new products this quarter to further its mission to “organize the world’s information and make it universally accessible and useful,” said Larry Page, Google’s co-founder and president of products.

“We anchor our business with our core strengths in search and advertising, and use our successes there to support innovation in new areas,” Page said. “Our technologies will significantly expand the definition of search, and the scope and scale of our business.”

Examples include the expansion of Google’s print program to make book content searchable; its SMS-based search service, and desktop search. The company made it clear that, unlike competitors like Yahoo, it would not pursue a portal strategy, but instead pick and choose new technology to either build or buy that will benefit its users.

“We look at each piece of what an end user might need and try to build the best one. Once we gain end users, we look for points of integration with our other products. We’re not going to do a portal strategy,” Schmidt affirmed.

Earlier this month, Yahoo reported net income of $253 million for the quarter, or $124 million, not counting the post-IPO sale of a quarter of its stake in Google.

Shares in Google, which debuted at $85 and quickly jumped to $100 at its August 19th IPO, closed at $149.38 today before earnings were reported.

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