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Google's soaring profits for Q3

Google keeps going from strength to strength. Google announced on Thursday that its third quarter profits have nearly doubled from a year ago to US$733 million and increased its revenue by 70per cent to US$2.6 billion, of which 99per cent was online advertising. In after-hours trading, Google's shares surged 7.5 percent. In regular trading, before the results were reported, the shares rose $6.75, or 1.6 percent, to $426.06. Some enthusiastic analysts predicted the shares could even surge to US$600. By contrast, Google's closest competitor Yahoo has seen a decline as sales have decreased in its online ads. Yahoo! announced a 38per cent fall in profits in the same quarter, at US$158.5 million, and a rise of only 19per cent in revenue to US$1.58 billion. A year ago, Google and Yahoo! were roughly neck and neck, each claiming 18per cent of US advertising revenues. Eric E. Schmidt, Google's chief executive was quoted as saying "In our model, the capital investments we are making give us differentially better service quality, better scale and better leverage". "And we intend to continue this." "Business is very, very strong for us," Mr Schmidt said in an interview. "Google is rocking." Today Google commands 23per cent of these revenues compared to 19per cent for Yahoo!, and is expected to end the year on 25per cent, according to the specialised institute eMarketer. In 2007 Google is expected to control 30per cent of the online advertising market and Yahoo! 18.4per cent, ahead of Microsoft and AOL (Time Warner). According to Brokers Merrill Lynch Google has over 50 percent of the search advertising market and said, "will continue to gain share over the next four quarters." They also said that Google's pulling ahead was ``likely driven by technology enhancements and relative traffic gains''. ``Technology advancements will extend Google's advertising share lead at the expense of its peers.''

Some of the Recent Major Wins for Google

  • The group won a contract this summer to provide advertising exclusively to the popular Internet exchange site MySpace and signed a similar deal with the online auction giant eBay's international sites.
  • Google has also just pulled off the biggest acquisition of its eight year history with the purchase of the YouTube video swap website for US$1.65 billion.
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