CW in Hollywood Reporter:Search, Destroy for Google's Q1

April 21, 2006
By Paul Bond

Shares of Google Inc. soared 7.7% in after-hours trading Thursday when the company reported first-quarter results that blew past Wall Street expectations.

The world's biggest Internet search company said net income grew to $592.3 million, up from $369.2 million a year ago, while revenue surged 79% to $2.3 billion.

Excluding traffic-acquisition costs, the payments Google makes to its distribution partners, revenue was $1.53 billion, beating analyst expectations of $1.47 billion.

Separately on Thursday, the Interactive Advertising Bureau reported that online advertising reached a record $12.5 billion last year, a 30% improvement compared with 2004. Online search advertising, where Google dominates, jumped 41% to $5.1 billion.

Nielsen//NetRatings said Thursday that Google handled 2.9 billion searches last month, 41% more than in the same month a year earlier. Google now controls 49% of the online search market, according to Nielsen//NetRatings.

"We basically have good news across the board, across the whole business," Google CEO Eric Schmidt told analysts Thursday.

Google said that sales from outside the U.S. contributed 42% of overall revenue, up from 39% a year ago. Schmidt predicted rapid international growth going forward, specifically in China.

"We expect lots of good news there shortly," he said.

"Our own internal estimates show that we're gaining share in all of our key markets in the U.S., U.K. and newer markets like India," Schmidt said.

Google stock, which had stumbled since the company's last earnings report and again after a top executive acknowledged that Google's growth eventually would slow from its torrid pace, advanced $32.10 after the closing bell Thursday to $446.75. Shares advanced 1.1% during the regular trading session.

Google stock has traded in a 52-week range of $195.91-$475.11. At the market close Thursday, Google's market capitalization was at $123.4 billion, $5 billion less than that of Time Warner Inc. and the Walt Disney Co. combined.

"Google is the fastest-growing and most profitable company in the history of capitalism," said Cody Willard, a hedge fund manager who has been bullish on Google since the company went public last year.