Shares of Google surged 7.3% to a record after the company's fourth-quarter profit rose sevenfold and sales topped $1 billion for the first time. The shares rose $14.06 to $205.96 at 4 p.m. New York time in Nasdaq Stock Market composite trading, after earlier soaring to a record $216.80. Google has more than doubled the $85 a share fetched at its August initial public offering. The share price surge pushed Google's market value to more than $56 billion, about $7 billion more than Yahoo and exceeding EBay $52 billion. Google's value is now bigger than eight members of the Dow Jones Industrial Average. Higher prices for advertising linked to search results helped Google generate increased profits. The company also kept a bigger slice of revenue from ads it distributes to other Internet sites. Chief Executive Officer Eric Schmidt is capitalizing on demand for Internet ads by signing up more partners to Google's AdSense network and building new products such as Google e-mail that displays more ads. Fourth-quarter net income rose to a record $204.1 million, or 71 cents a share, from $27.3 million, or 10 cents, a year earlier, the Mountain View, California-based company said in a statement yesterday. Sales doubled to $1.03 billion from $512.2 million. Profit excluding compensation costs was 92 cents a share, topping the 77-cent average estimate of 21 analysts surveyed by Thomson Financial. Revenue excluding traffic acquisition costs, fees that Google pays to other Web sites that display ads it sells, was $653.8 million, beating the $590 million estimate. The surge in Google's stock price since it first sold shares to the public has catapulted its two founders, Larry Page and Sergey Brin, into the ranks of the world's richest people. At a price of $205.96 a share, Brin is worth about $7.66 billion and Page is worth about $7.68 billion. Brin held 37.2 million shares and Page held 37.3 million shares, according to the Washington Service, which tracks insider trading. Bethesda, Maryland-based Washington Service cited regulatory filings of Jan. 24 for Page and Dec. 29 for Brin. Demand for advertising is strong enough that customers will pay more, Schmidt said yesterday in a telephone interview. The shares are now valued at 59.6 times estimated 2005 per- share earnings, compared with 68 times for Yahoo. That Google and Yahoo are priced relative to earnings stands in contrast to that of the Internet bubble when analysts including Morgan Stanley's Mary Meeker justified valuing unprofitable Internet companies by counting how many viewers, or ``eyeballs,'' their Web sites attracted. Sales from Google's own site more than doubled to $530 million, accounting for 51% of total revenue, the company said. Revenue from sites that Google supplies with ads rose 92% to $490 million, or 48% of total revenue. Excluding fees Google pays to sites that display its ads, revenue from these affiliate sites almost tripled in the fourth quarter from a year ago, according to Goldman's Noto. Google is devoting more time to attracting large customers and their advertising agencies, Page said yesterday on a conference call with analysts. The company is conducting training programs with agencies and has reorganized its sales force into groups targeting specific industries. Beyond search-linked ads on its own site, Google also places ads on sites including Time Warner Inc.'s America Online, search engine Ask Jeeves Inc., and publications such as the online New York Times and online journals called Web logs, or blogs. Google passes on part of the revenue it receives from advertisers to these sites when users click on the ads. In the latest quarter, the company paid 77% of this revenue to those sites, compared with 79% in the third quarter and 85% in the fourth quarter last year. Google's revenue rise in the fourth quarter compares with Yahoo's 62% gain. Yahoo on Jan. 18 said profit jumped almost fivefold.
Google in November boosted its share of worldwide searches by 3% points to 47%, according to data from ComScore Networks, which monitors Web use. Yahoo's share increased 1 point to 27%, while Microsoft's MSN and Time Warner Inc.'s Web services fell 2 points and 4 points, respectively. Google Shares Hit New High After Upbeat Q4 ReportTechNewsWorld Google profit, revenue rocketSan Jose Mercury News (Subscription) Los Angeles Times (subscription) - Northwest Herald - Globetechnology.com - San Jose Mercury News (subscription) - all 331 related »
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