Google said yesterday that profit soared nearly eightfold as it wrung more money out of advertisers in the fourth quarter. Google shares jumped nearly...

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SAN FRANCISCO — Google said yesterday that profit soared nearly eightfold as it wrung more money out of advertisers in the fourth quarter.

Google shares jumped nearly 10 percent to a record $210.30 — 147 percent above the initial public offering price of $85 in August.

Based in Mountain View, Calif., Google reported a fourth-quarter profit of $204 million, or 71 cents a share, compared with $27 million, or 10 cents, in the same quarter of 2003, when it was closely held. Sales doubled to $1 billion and surpassed even the most bullish analysts’ predictions for the quarter, Google’s second since its IPO.

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For the full year, profit was $399 million, compared with $106 million. Revenue doubled to $3.2 billion, with half coming from ads on Google Web sites and half from ads on the Web sites of partners like America Online.

The company said it had attracted more people to its stable of Web sites and was getting better at making sure they see tempting ads. Google’s text-based ads generate revenue only when users click on them.

“This is the second quarter in a row that analysts have dramatically underestimated the company,” said Scott Kessler, an analyst with Standard & Poor’s. “They’re executing in a way that I don’t think most people would have imagined.”

Excluding the money Google shared with Web-site operators that ran targeted ads, the company sales were $654 million. That was $61 million more than the consensus expectation of 19 analysts, and $28 million more than the top forecast.

Because the company is growing fast and its executives won’t issue revenue or profit forecasts, financial results are especially hard to predict.

Google shares, which fell $3.72 to $191.90 in regular Nasdaq trading, shot up $18.45 in after-hours trading after the earnings announcement.

“It’s obvious to me we are benefiting from the shift of less targeted [advertising] to more targeted,” said Google Chief Executive Eric Schmidt. “We are a small player in a very big market.”

That market is rapidly expanding, and competitors such as Yahoo! and Microsoft want to slow Google’s growth. To do that, they’re investing some of the cash generated by their other businesses to attack Google’s dominance in search engines.

Yahoo! crept up to 31.9 percent of all Web searches in the United States in December, from 27.1 percent a year before, according to market researcher ComScore Networks. Google fell slightly, to 34.7 percent.

As for Microsoft, it released its own search engine yesterday and vowed to spend heavily on advertising to increase its searchmarket share of 16.3 percent.

But Schmidt said Google wouldn’t abandon the approach of relying on word of mouth. “We’ve not found a need to change the way we market our products or services,” he said.

RBC Capital Markets analyst Jordan Rohan said Google’s profit margins were on the rise because of growth overseas. “International markets are reaching critical mass, both of users and advertisers,” he said.

During a conference call with Google executives, analysts questioned the company’s strategy of giving away many products — such as its photo-sharing service, Picasa — without plastering ads or charging subscription fees.

They also expressed mild concern with the lack of diversity in Google’s revenue stream compared to competitors.

“That’s a concern that’ll always be there,” said Youssef Squali, an analyst with Jefferies. “The other side of the coin is that pure-plays always grow faster than diversified companies in the growth phase of an industry.”

Based on yesterday’s closing stock price, Google’s market value stood at $55 billion — more than General Motors and Ford combined. Google’s stock carries a price-to-earnings ratio of nearly 230, an extremely high multiple for a measure that is widely used to appraise a company’s value. By comparison, other well-known — and older — Internet companies such as Yahoo!, Amazon.com and eBay have price-to-earnings multiples ranging between 58 and 68.

Information about Google’s market value provided by The Associated Press