Google says economy is on the mend

Google said yesterday that the worst of the recession is now over as it reported a rise in quarterly profits and sales ahead of analysts’ expectations.

The internet search group said that net income in the third quarter was $1.64 billion, or $5.13 a share, up 27 per cent from $1.29 billion, or $4.06 a share, a year earlier.

Sales for the three months to September rose 7 per cent to $5.94 billion, suggesting that the demand for online advertising is growing as the economy shows signs of recovery.

Eric Schmidt, the company’s chief, said: “While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future.”

Google, considered a barometer for internet commerce because its search engine is the hub of the web’s largest advertising network, said that the number of paid clicks, including clicks on advertisements on Google and partner sites, rose 4 per cent from the previous quarter and 14 per cent from the same period last year.

The average amount per click paid to Google also rose about 5 per cent from last quarter, although it was down about 6 per cent from the same period a year ago.

Revenues from outside the United States came to $3.14 billion, representing 53 per cent of total revenues in the third quarter, the same proportion as the second quarter.

Mr Schmidt said that the company would continue to invest in its core business and in innovation. It wanted to get to “the perfect search engine” and advertisers would like to spend more with Google if the company’s product allows them to do that, he suggested.

He added that the group was “open for business in making strategic acquisitions, both large and small”.

Earlier in the day, Google said that it would next year launch a new online service for booksellers called Google Editions, which will let readers buy books and read them on gadgets ranging from cell phones to possibly e-book devices.

Shares in Google rose by $7.76, or 1.5 per cent, to $537.67 in extended trading, closing at $529.91 on the Nasdaq stock market. The shares have climbed 72 per cent this year.