Google Comes On Strong With £3.3 Billion Quarter

Google is raking in the cash with a 25 percent increase in profit over this time last year

Google has announced strong revenues for the second quarter of this year, and increased its profits by 25 percent over the same quarter in 2009.

The company announced revenue of  $5.1 billion (£3.3 bn) for the second quarter of this year, with net income of $1.84 billion (£1.2bn), compared to $1.48 billion (£.96) in the second quarter of 2009. The company announced earnings per share of $6.45, while analsts had predicted $6.53, but the numbers are much better than the same period a year ago, when the company earned $5.36 a share on net sales of $4.07 billion (£2.6bn).

Big turnover from adverts

Counting TAC, or the money it pays to partners to advertise on their sites, Google reported revenues of $6.82 billion (£4.4bn), a 24 percent increase over second quarter 2009 revenues of $5.52 billion (£3.6bn).

TAC grew from $1.45 billion (£.94bn) in the Q2 2009 to $1.73 billion (£1.1bn) this year, providing 26 percent of Google’s ad revenues.

As financial analysts expected, paid clicks, or clicks related to ads served on Google sites and the sites of its AdSense partners, grew 15 percent from the year-ago period.

Shares of Google fell 4 percent in after-hours trading on the news.

For the most part, it was business as usual for Google though Google CEO Eric Schmidt has turned the earnings call with analysts over to CFO Patrick Pichette and Jonathan Rosenberg, senior vice president of product management at Google.

However, Schmidt noted in the press release:

“We saw strength in every major product area, as more and more traditional brand advertisers embraced search advertising and as large advertisers increasingly ran integrated campaigns across search, display, and mobile. We feel confident about our future, and plan to continue to invest aggressively in our core areas of strategic focus.”

Google’s positives for the quarter outside the numbers include a legal victory over Viacom, which sued Google and YouTube in a $1 billion copyright infringement grievance. Pichette said that defense cost Google $100 million in three years.

Google also successfully refreshed its search engine from front to back, upgrading the user interface and the indexing infrastructure to produce more polished results.

Google’s optimism comes in the face of a standoff with China that threatened to stall Google’s operations there (though this appears to be resolved); allegations of antcompetitive actions that are being studied by the European Commission; the failure of the Nexus One to sell via Google’s Webstore; and seemingly no cohesive plan to shore up its social networking front versus Facebook.

Google’s biggest threat at this point is Apple, whose iPhone and iPad tablet threaten to pinch Google’s mobile advertising opportunities on the Web. Google’s Android platform is strong, but still trails far behind the hallowed iPhone, whose biggest threat appears to be itself thanks to faulty antennas.

However, ABI Research believes there is plenty of pie for everyone: $1.2 billion worth of mobile advertising by 2015.