Google shook off the economic doldrums to deliver a third-quarter profit that topped analysts' expectations, supporting the Internet search leader's theory that its advertising system will prosper even in tough times.
SAN FRANCISCO — Google shook off the economic doldrums to deliver a third-quarter profit that topped analysts’ expectations, supporting the Internet search leader’s theory that its advertising system will prosper even in tough times.
The company said Thursday that it made $1.35 billion, $4.24 per share. The profit rose 26 percent from $1.07 billion, or $3.38 per share, at the same time last year.
That pushed shares up $36.98, or 10.5 percent, in extended trading after closing at $353.02, up $13.85 as stock markets rebounded during the regular session.
Analysts had been decreasing their projections amid waves of investor pessimism that pounded Google’s stock price to a three-year low of $309.44 earlier Thursday.
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Excluding costs for employee-stock compensation, Google said it would have made $4.92 per share. That figure surpassed the average estimate of $4.75 per share among analysts polled by Thomson Reuters.
Revenue climbed 31 percent to $5.54 billion. After subtracting advertising commissions, Google’s revenue totaled $4.04 billion — about $20 million below analyst estimates.
The pleasant surprise helped ease fears that online advertisers will stop pouring as much money into Google in an effort to save money in an economy that appears headed toward its worst recession since the early 1980s.
Google executives have maintained that the company can still thrive because its technology does a better job of finding customers at a lower cost to advertisers than traditional marketing campaigns.
Those factors, Google argues, means it could receive an even bigger slice of advertising budgets in a crumbling economy.
What’s more, consumers scrambling to make ends meet may be more likely to use the Internet to hunt for bargains — a quest that could increase the Google search requests that spit out ads.
Even so, Google Chairman and CEO Eric Schmidt acknowledged that even the Internet’s most profitable company might not be immune to the fallout from the worst financial crisis in the United States since the stock market crashed in 1929.
“It is clear that the economic situation is so fluid that we’re all sort of in uncharted territory,” Schmidt said during a conference call with analysts.
To weather the turbulence, Schmidt said Google will keep a close eye on its expenses because “it’s the right thing to do.”
The more frugal approach is a change of pace for Google, which is renowned for spending liberally to provide its employees with free meals around the clock and expanding the data centers that power its search engine, e-mail and other products.
In an indication it may be tightening its purse strings, Google’s capital expenditures in the third quarter totaled $452 million, an 18 percent decrease from last year.
Google hired an additional 519 workers during the quarter, down from an increase of 2,130 employees at the same time last year. The company now has 20,123 employees.