Google profits jump 30% despite worries over online ads

Google reported on Thursday that its profits surged more than 30 per cent to 1.31 billion dollars in the first three months of the year, erasing fears of sagging online advertising revenues.

Google's stock leaped more than 17 per cent to 526 dollars a share in after-hours trading on the news.

Google reported that overall revenues rose to 5.19 billion dollars in the quarter and profits equalled 4.12 dollars per share, compared to 3.18 dollars per share in the same period last year.

"We are obviously very pleased," Google chief executive Eric Schmidt said during a conference call with analysts and media.

"It is clear to us we are well-positioned for 2008 and beyond despite the business environment we find ourselves in."

Revenue from Google's main cash source, clicks on online ads, rose 20 per cent in the quarter, mitigating worries that shifting to displaying fewer, better-targeted ads would hurt the California company.

"Google is a cash machine," said Silicon Valley analyst Rob Enderle of Enderle Group.

"The only thing that could hurt them is if, for whatever reason, the market re-looks at the value placed on eyeballs on the Web and pushes back on pricing, which is always a possibility, but is extremely remote."

Schmidt was adamant that Google is not being affected by macroeconomic conditions, including the troubled business market in the United States.

Slightly more than half of Google's reported revenues came from outside US borders.

Making the bulk of revenues overseas is a trend among US technology giants including Intel, IBM and Hewlett Packard.

"That shows significant advantage for companies spread out internationally to weather a storm in the US market," Enderle said.

"I think it reflects the fact they could weather anything other than a worldwide storm. As long as the storms remain localized they are okay."

Google co-founder Serge Brin said during the conference call that the firm has improved Internet search pages tailored for users in Asia and other overseas markets.

Merging DoubleClick's ad-targeting technology with Google properties, especially the popular YouTube website, is "hugely strategic" for the company, according to Schmidt.

Google completed its 3.1 billion dollar buy of DoubleClick last month. "As we integrate DoubleClick into our advertising platform, we see exciting new ways to improve the user experience and increase value for our advertisers and partners," Schmidt said.