San Francisco: Google, the largest internet search company, rose the most in almost three years after reporting sales that beat projections, a sign it's making progress expanding beyond searchadvertising.
Sales, excluding revenue passed on to partner sites, rose to $6.92 billion (Dh25.42 billion), Mountain View, California-based Google said yesterday on its website. That topped $6.57 billion, the average estimate of analysts surveyed by Bloomberg.
New markets
Chief executive officer Larry Page, who succeeded Eric Schmidt in April, is pushing into new markets such as mobile and display advertising while trying to preserve the company's leadership in search, an area that generates most of Google's revenue. Ad prices, calculated on a per-click basis, rose at a faster pace last quarter, a sign companies are more willing to market their wares online.
"Google is a real-time indicator in terms of the broader economy; this is a good sign," Gene Munster, an analyst at Piper Jaffray in Minneapolis, said. "The improvements in ad units can continue for the next few quarters."
Google rose $68.29, or 13 per cent, to $597.23 at 9.36am New York time on the Nasdaq Stock Market, after earlier touching $600.25 for the biggest gain since October 13, 2008. Before yesterday, the shares had declined 11 per cent this year.
Over the next 12 months, Google shares are projected to surge to $724.55, according to the average estimate of analysts surveyed by Bloomberg. After the earnings report, Jefferies and Co raised its price target to $830 from $800, while RBC Capital Markets boosted its projection to $790 from $680. Second-quarter profit, excluding some items, was $8.74 a share, exceeding the $7.85 average of analysts' estimates. Net income gained 36 per cent to $2.51 billion, or $7.68 a share, from $1.84 billion, or $5.71, a year earlier.
The average price for ads, calculated on a per-click basis, rose 12 per cent last quarter, after rising about 8 per cent in the previous period, Google said.
Internet rivals
Page is investing in new businesses to help Google compete with newer internet rivals such as Facebook, the world's most popular social-networking service. Online users spent an average of 6.7 hours on Face-book in June, compared with 4.1 hours on Google, according to ComScore.
To narrow that gap, Google last month rolled out Google+, a feature that lets users interact online. It's comparable to Facebook, yet aims to let people more easily set up groups of contacts. More than ten million users have signed up for Google+ so far, and they share and receive more than a billion items — such as photos and messages — a day, Page said during a call with analysts.
"That is a big number for something that is essentially" in a test phase, said Paul Meeks, an analyst at Capstone Investments Inc in Charleston, South Carolina. He rates the stock a "buy" and doesn't own it.
