Google Delivers; Stock Up Sharply

Google on Thursday allayed concerns about its paid click growth rate with first quarter earnings that topped Wall Street’s low expectations.

Google reported first quarter net income of $1.31 billion, or $4.12 a share, on revenue of $5.19 billion. Excluding traffic acquisition costs of $1.49 billion, revenue was $3.7 billion. Excluding charges Google’s earnings were $1.54 billion, or $4.84 a share.

According to Thomson Financial, Google was expected to report first quarter earnings of $4.52 a share on revenue of $3.6 billion.

The search giant’s earnings results (statement and preview) include the operations of DoubleClick, but the company noted that the impact from its latest acquisition was immaterial for revenue and slightly dilutive on earnings.

On a conference call, CEO Eric Schmidt said: “It’s clear to us that we’re well positioned for 2008 and beyond” regardless of the economy. He added that paid click growth of 4 percent in the first quarter from the fourth quarter was higher than comScore noted. Paid clicks were up 20 percent from a year ago and 4 percent from the fourth quarter. Comscore had Google’s first quarter paid click growth rate at 1.8 percent.

“We’re showing fewer, but much better ads in each cycle,” said Schmidt.

Compared to a year ago, Google’s revenue was up 42 percent.

By the numbers (revenue figures don’t exclude TAC):

• Google site revenue was $3.4 billion, up 49 percent from a year ago and 9 percent from the fourth quarter. Google network revenue (AdSense programs) was $1.69 billion, up 25 percent from a year ago.
• International revenue was $2.65 billion, or 51 percent of total revenue. Google outlined what kind of bump it got from a weak dollar: “Had foreign exchange rates remained constant from the fourth quarter of 2007 through the first quarter of 2008, our revenues in the first quarter of 2008 would have been $18 million lower. Had foreign exchange rates remained constant from the first quarter of 2007 through the first quarter of 2008, our revenues in the first quarter of 2008 would have been $202 million lower.”
• Paid clicks were up 20 percent from a year ago and 4 percent from the fourth quarter, which was largely expected.
• Google generated cash flow of $1.78 billion in the first quarter, up from $1.69 billion in the fourth quarter.

Comments

[atauber]

next stop $750?

[billddrummer]

Just goes to show that innovation, consistently practiced, produces superior results for investors,customers, and employees.

[globalmacro]

lets get to 600 first and then we'll go from there, ok?

[Ames Tiedeman]

I guess it goes back to 700.

[Ker]

Guys, I really need an advice for tomorrow (friday 18 Apr) , my plan is to short GOOG down to $480.00. I think it will be a massive sell off.
Do you think my move will is correct?

[dphoenix]

Ker - that's probably the worst plan i have ever heard - you really need to rethink your instincts

[Everyday Finance]

No reason for Google to sell off drastically; they're back in the game. Ironically, Google has sold off recently due to Comscore's blown call and now they're DOWN 8.5% in after hours. How did they get it so wrong? I posted on this tonight; they lose, Google wins.

Note, this was good for Baidu as well, another EverydayFinance portfolio holding. Up 7% in after hours.

[1option]

Yeah I don't think GOOG is going to sell off tomorrow like you're thinking. If anything, we may see a continuation run up.

[nepzone]

If google wants to improve on quality clicks, they can kiss their profit growth Good-bye!

Let's be serious, google is making a lot of money from millions of boring internet addicts clicking away coz they are bored and have nothing else better to do but worse internet can be an addiction just like smoking.

so if google really monitor IP addresses and their number of clicks to improve quality, you can surely bet profits will drop.

Thus, do you think google will do anything to dent their own profits?