Google Inc.’s third-quarter earnings demonstrated that the Internet search leader is capable of surpassing investors’ short-term expectations while still investing heavily in long-range projects.
Google reported a 32 percent jump in net income Thursday and provided the most persuasive evidence yet that its past investments are paying off, helping it diversify away from search advertising.
Wall Street was encouraged, and sent Google’s shares soaring 9 percent to $590.01 in extended trading after the release of results.
Text links placed above or alongside search results are still Google’s main source of revenue, but the company has laid out billions to beef up its ability to sell image-based “display” ads, ads inside Web videos and on mobile phones. The company paid $3.2 billion for DoubleClick, a display ad network, and $681 million for mobile-ad firm AdMob.
Executives indicated Thursday that display advertising accounted for nearly 10 percent of ad revenue in the quarter, and mobile advertising was almost 4 percent.
Both businesses are doing better than expected, said analyst Clayton Moran of The Benchmark Co.
Those successes could help calm investors worried about Google’s insistence on spending more despite ongoing pessimism about the economy. The Web search leader added 1,500 workers in the quarter, for a total of 3,500 new employees so far this year. Capital expenditures — what Google pays for data centers, servers and networking equipment to keep its growing number of Web services online — increased more than fourfold to $757 million from $186 million a year earlier.
“That obviously could be a concern for investors, but when you look at the performance of the business, the conclusion is that the investment’s worth it,” Moran said.
Google is known for making long-shot investments. This week, some of its oddest projects yet came to light: It’s dabbling in wind farms and computer-driven cars.
During a conference call with analysts, Google Chief Financial Officer Patrick Pichette left no doubt that such investments would continue, saying, “We’re on this growth agenda at full throttle.”
For July through September, Google’s net income rose to $2.2 billion, or $6.72 per share, from $1.6 billion, or $5.13 per share, a year earlier.
Excluding certain expenses, Google earned $7.64 a share, topping the $6.69 a share analysts expected.
Google’s tax rate was lower than usual in the quarter, which helped boost net income. But even without that boon, earnings would have beat expectations, Moran said.
Revenue rose 23 percent to $7.3 billion from $5.9 billion a year earlier. After subtracting commissions paid to its ad partners, Google’s revenue stood at $5.5 billion, about $200 million more than analysts predicted, according to a Thomson Reuters survey.
The company ended the quarter with about $33.4 billion in cash and marketable securities.
Google, which is based in Mountain View, Calif., said its average cost per click rose 3 percent from a year ago, meaning companies paid more to place ads. People clicked on ads 16 percent more than they did in the same period last year.
During a conference call with analysts, Google said sales of its display ads, which include those on YouTube, are on a pace that would translate to $2.5 billion annually. Its mobile advertising businesses are on pace to bring in $1 billion in revenue annually. The figures are the most specific Google has released about the two emerging businesses.
Before the release of results, its shares lost $2.37 to close at $540.93.
Raoul Peck Resurrects A Once-Forgotten Anti-Apartheid Photographer In “Ernest Cole: Lost and Found”
When the photographer Ernest Cole died in 1990 at the age of 49 from pancreatic cancer at a Manhattan hospital, his death was little noted.
Cole, one of the most important chroniclers of apartheid-era South Africa, was by then mostly forgotten and penniless. Banned by his native country after the publication of his pioneering photography book "House of Bondage," Cole had emigrated in 1966 to the United States. But his life in exile gradually disintegrated into intermittent homelessness. A six-paragraph obituary in The New York Times ran alongside a list of death notices.
But Cole receives a vibrant and stirring resurrection in Raoul Peck's new film "Ernest Cole: Lost and Found," narrated in Cole's own words and voiced by LaKeith Stanfield. The film, which opens in theaters Friday, is laced throughout with Cole's photographs, many of them not before seen publicly.
As he did in his Oscar-nominated James Baldwin documentary "I Am Not Your Negro," the Haitian-born Peck shares screenwriting credit with his subject. "Ernest Cole: Lost and Found" is drawn from Cole's own writings. In words and images, Peck brings the tragic story of Cole to vivid life, reopening the lens through which Cole so perceptively saw injustice and humanity.
"Film is a political tool for me," Peck said in a recent interview over lunch in Manhattan. "My job is to go to the widest audience possible and try to give them something to help them understand where they are, what they are doing, what role they are playing. It's about my fight today. I don't care about the past."
"Ernest Cole: Lost and Found" is a movie layered with meaning that goes beyond Cole's work. It asks questions not just about the societies Cole documented but of how he was treated as an artist,... Read More