Google's third quarterly profit surpassed Wall Street forecasts, sending shares up more than 10 per cent as the Internet search and advertising leader withstood deepening economic turmoil around the globe.
Web traffic and revenue growth were strong in all major parts of the world and searches were up for almost every industry using Google, chief executive Eric Schmidt said.
But he added that there was uncertainty in financial services, media and the retail sectors.
"We are all in uncharted territory," he said of the economy, adding that Google would watch expenses.
Google, whose Irish operations employ 650 people, added about 500 employees in the quarter, about half of them engineers, taking total staff to about 20,000, and the company said it would continue to hire cautiously.
Net income for the third quarter rose to $1.35 billion, or $4.24 a diluted share, from $1.07 billion, or $3.38 per share.
Excluding employee stock compensation costs and one-time items, profit rose to $4.92 per diluted share and topped Wall Street's target of $4.75, according to Reuters Estimates.
Revenue, including commissions paid to affiliated advertising sites, totaled $5.54 billion, up 31 per cent from the year-earlier quarter but up only 3 per cent from the second quarter of this year. Forecasts had called for annual revenue growth to range from 26 per cent to 37 per cent. By comparison, revenue had risen 57 per cent in the quarter a year earlier.
The company dramatically cut back on purchases of property and equipment to $452 million for the quarter ended in September from $697 million in the June quarter.
Google continues to throw off cash at one of the fastest rates in the Internet industry. It generated $1.73 billion in free cash flow in the third quarter, up 60 per cent both from the year-earlier quarter and from the second quarter ended in June.
YouTube is now running ads against 90 per cent of all the videos claimed by partners using its content identification tool, executives said.
The company's stock has fallen by more than half this year as the company's pay-per-click advertising format has become caught up in the year-long slump in the overall advertising market. The roughly 52 per cent decline in Google shares compares to the 38 per cent drop so far this year in the S&P 500 Index .
Google shares hit an all-time high of $747 just under a year ago as investors calculated the value of the company's moves to expand into new advertising formats such as cellphones, radio, TV and display ads preferred by corporate marketers.
Shares of Google rose more than 10 per cent to $390.30 in after-hours trade following the report, building further on a 4.1 per cent gain in regular trading on Nasdaq, when it closed at $353.02 after a seesaw trading day.
Reuters