Google blows past analysts

Shares jump after impressive Q1

Google delivered impressive quarterly financial results Thursday in stark contrast to the dismal performance chief rival Yahoo! Inc. put in earlier this week.

Google posted net income of $1 billion in the first quarter, up from $592 million a year ago. Revenue rose from $2.25 billion last year to $3.66 billion.

The results blew past analysts' estimates and had shares jumping more than $14 in after-hours trading after having fallen $4.36 to $471.65 during the regular session.

Traffic-acquisition costs, the portion of Google's search-advertising revenue it gives to its Web site partners, was $1.3 billion, reducing its net revenue to about $2.53 billion, also ahead of Wall Street estimates.

Google's success appears in part to be coming at the expense of recently struggling Yahoo! That company, run by former Warner Bros. co-chief Terry Semel, disappointed Wall Street on Tuesday by reporting a decline in quarter-over-quarter profit. Yahoo! shares have sunk 14.3% since then.

Google CEO Eric Schmidt, in a conference call Thursday, stressed Google's opportunity in foreign markets. International sales represented 47% of Google's revenue in the quarter, up from 42% a year ago.

And while nearly all of Google's revenue comes from the sale of Internet search advertising, Schmidt spoke of inroads Google is making into traditional media. Google has ad sales partnerships with the likes of Clear Channel Communications in radio and EchoStar Communications in television, for example.

Schmidt said that it's the strength of Google's core online-search business that allows the company to take risks with new products, adding, "Targeted and effective advertising continues to be our mantra."

Sergei Brin, Google's co-founder and president of technology, told analysts that he does not view advertising as a zero-sum game, whereby advertisers are taking money spent on traditional media in order to beef up spending on the Internet without actually increasing advertising budgets.

"That has not been our experience," he said.

Schmidt also defended YouTube, the $1.65 billion acquisition that has content rightsholders like Viacom upset because oftentimes its video appears there without permission.

Schmidt said such concerns ought to be muted by Google's soon-to-come Claim Your Content, a tool that is a mechanism for proving ownership of video and for automating the take-down process.