Google Beats Wall Street Estimates in Fourth Quarter

"Gangnam Style"

Psy's "Gangnam Style," YouTube's most-viewed video ever at 1.23 billion and counting, has generated $8 million in ad sales.

Google reported fourth-quarter earnings that were stronger than the expectations of analysts, and its stock was surging 5 percent after the closing bell Tuesday.

The company that operates the world's dominant Internet search engine said it earned $10.65 per share in the quarter, up 13 percent year-over-year, while analysts expected about $10.50. Net income rose 7 percent to $2.9 billion, and revenue was up 36 percent to  $14.4 billion.

On a conference call with analysts, chief business officer Nikesh Arora said that Psy's "Gangnam Style" is the most-watched video of all time (1.23 billion and counting) and that it generated $8 million in advertising deals.

"Video is now baked into the core of our products," Arora said.

Arora said that in 2012, viewers watched about 4 billion hours worth of YouTube videos each month.

Probably the most closely watched aspect of Google's business is the cost that advertisers pay each time a user clicks their ad, because it has been falling for about a year-and-a-half as more users surf the Internet on mobile devices.

While the average cost-per-click fell 6 percent compared with the same quarter a year ago, it actually rose 2 percent over what it was in the third quarter, which seemed to impress investors and analysts.

Google shares fell $1.64 to $702.87 during the regular session on Tuesday but surged $36 after the closing bell when financial results were released.