Google, Inc., controlling 47% of all search queries to the tune of over 6 billion searches during the second quarter of 2005, also announced quadrupled returns. The world’s top search engine reported record revenue of $1.384 billion.
More than doubling rival Yahoo!’s traffic, Google’s profit soared to $342.8 million, or $1.19 a share, up from $79.1 million or 30 cents a share this time last year. The Mountain View, Calif.-based company said it exceeded a number of analysts’ expectations, reporting ad sales of $890 million-nearly $50 million over estimates.
“We had an excellent quarter. We continued to innovate, we continued to execute and we stayed focused on our users,” said Eric Schmidt, Google chief executive officer. “Google had another solid performance.”
On Wall Street, Google shares prices also reached a record high, topping out at around $320 before more closing out at $313.94 amid concerns of a slowing market. During a conference call, Schmidt reiterated that the third quarter is traditionally a slower market. Google shares have more than tripled since their public debut in August of last year.
Google announced a significant increase in spending on research and development, allotting $96 million for the effort in the second quarter, an increase of $17 million over the first quarter. In addition, the number of
Google employees has nearly doubled since the end of June 2004, rising from 2292 full-time employees to 4183.
Most financial analysts are still giving a “buy” rating on Google shares. While a few have rated the stock as a “hold,” only one analyst, Philip Remek of Guzman & Co., has rated Google as “sell.”
Since Google went public in August of 2004, shares have outperformed analyst estimates by at least 13 cents every single quarter.
Nearly all of Google’s revenue comes from advertising from its AdWords and AdSense programs. Executives at the company attribute the steadily increasing volume of traffic, which generates revenue on a pay-per-click advertising model, to continually updated services.
New services include Google Maps, Google Maps API, Google Earth, Google Personalized Home Page, My Search History, and Google Web Accelerator. Officials for the company also expressed hope for upcoming programs like Google Video Playback, Google Print for Publishers, and Google Print for Libraries.
Larry Page, creator of Google’s PageRank system, said the breadth of content added by these programs will ensure future success as well.
“We will continue to consult and work with our industry partners to make sure we fairly balance the needs and rights of content providers with the value we believe these new forms of content will offer to users,” said Page.
According to Smith Barney analyst Mark Mahaney, Internet advertising is expected to grow by 26 percent this to $12.1 billion, or 4.4 percent of the total advertising market.
