Google on Thursday opened an even wider gap with web search rivals Yahoo and Microsoft when it reported a 57 per cent jump in revenues for the latest quarter.
The figures were boosted by improvements in its market share and the efficiency of its online advertising system.
The results beat expectations and capped a two-month surge in Google’s shares that by Thursday had pushed its stock market value to nearly $200bn, topping Cisco Systems for the first time and making it the world’s second most valuable technology company behind Microsoft.
Sergey Brin, co-founder, brushed off suggestions Google was still overly dependent on its search advertising system, in spite of costly investments to try to break into a range of other advertising markets, including television and radio.
“People view us as a one-trick pony because that trick is doing very well, and it took a while to learn,” Mr Brin said. Google had succeeded in spite of being “laughed at” when it started out in advertising, and investments in other areas were likely to take “several years” to pay off, he added.
Google’s latest growth spurt rewarded the Wall Street bulls, who had pushed its value up by $50bn in the past two months and defied expectations that it would see more of a summer slowdown. “The seasonal weakness in traffic was milder than we expected,” said Eric Schmidt, chief executive officer.
A strong international performance was capped by a 10 per cent jump in revenues in the UK compared with the second quarter of this year, to $661m, with much of the increase coming from financial services advertising.
Mr Brin said it was too early to tell if the crisis in the mortgage market would hurt business, but that Google typically saw an increase in advertising at such times as advertisers turned to media that delivered measurable returns.
Underpinning Google’s performance was an increase in the amount of advertising revenue the company generates from each search – a measure on which it is already twice as efficient as Yahoo, by some estimates. Revenues reached $4.23bn, while net income jumped 46 per cent to $1.07bn, or $3.38 a share.
A hiring binge earlier in the year that had fed concerns about an escalation in costs continued in the latest quarter, with Google adding 2,130 workers to take the total to nearly 16,000.
While executives refused to comment on speculation that Google would launch its own mobile phone, Larry Page, co-founder, confirmed the company been studying a number of ways to become a bigger force in the mobile business.
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