Posted on 02/01/2005 7:00:13 PM PST by wagglebee
SAN FRANCISCO (Reuters) - Web search leader Google Inc. posted quarterly earnings on Tuesday that blew past expectations on strong Web search advertising, driving its share price up almost 10 percent to a record high.
The earnings were seven times higher than a year earlier on revenue that doubled to more than $1 billion. The news also lifted shares of rival Internet companies Yahoo Inc. and Ask Jeeves Inc., setting the tone for a possible tech rally on Wednesday.
"Our international businesses are essentially on fire," said Google Chief Executive Eric Schmidt, who added that Britain led growth, but that Ireland and Scandinavia were also big contributors.
Advertising revenues also expanded in the United States but they grew even faster offshore.
Google reported net income of $204.1 million, or 71 cents per share, in the fourth quarter, compared with $27.3 million, or 10 cents per share, a year earlier.
Revenue soared to $1.03 billion from $512.2 million, beating analysts' average estimate of $962.4 million, according to Reuters Estimates.
On average, analysts had forecast net income of 57 cents a share. Excluding items, such as stock-based compensation, analysts expected 77 cents per share versus the 88 cents delivered by Google on that basis.
"The results were very impressive," said American Technology Research analyst Mark Mahaney.
BIG EXPECTATIONS
"There was a lot of talk that Google was going to post a strong quarter," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. "People were looking for them to beat, and they did beat."
"Revenue is well ahead of anybody's expectations," said Barry Randall, portfolio manager of the $100 million First American Technology Fund, which owns 4,682 Google shares. "Revenue is the hardest thing -- they got that done anyway."
Randall said the company, famed for lavish employee benefits and spending big money on "cool" technology projects with no immediate eye toward revenue, also appeared to have controlled expenses well.
Google, based in Mountain View, California, went public in mid-August. Shares, which sold in the IPO at $85, rallied in after-hours trade following the results to $210.36, compared with their Nasdaq close of $191.90.
The company won users with its elegant technology that took Web search to a new level. But Google is best loved by investors for popularizing its own flavor of Web search advertising, a business that now fuels virtually all of its revenue.
"Prices (for online ads) were being bid higher as more advertisers were moving from offline to online," said Janco Partners analyst Martin Pyykkonen.
Google's Schmidt confirmed that pay-per-click ad rates were rising. He did not give specifics on pricing increases but added that advertisers were not "pushing back on pricing."
Schmidt also repeated that Google was not building a Web browser to take on Microsoft Corp., which unveiled the full release of its own advertising-supported Web search engine on Tuesday.
In the middle of February, the final IPO-related selling restrictions will lift on 176.9 million Google shares. Analysts said such sales could weigh on the stock price, but added that recently disclosed executive stock selling plans would temper the impact.
WE'RE DOOMED!
Anyone know anyone that actually got in for $85?
I know one person who did; however, he was worth well over $200 million dollars to begin with and the number of shares that each person could purchase were fairly restricted.
Yeah, he retired from his job last year, I guess someone decided he might be a little short on cash. :)
Google did have to postpone it's IPO for a considerable amount of time. I won't mention whether a certain president's policies had anything to do with it.
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