Google profits beat analysts' estimates

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The Independent Online

Google did enough last night to justify the recent surge in its share price, reporting a quarterly profit that beat Wall Street's estimates, despite another big increase in staff numbers.

The search engine giant said it was hiring at a rate of 160 new employees a week, an even faster rate than earlier this year, when analysts first became concerned that soaring costs could hit the company's bottom line.

However, Google made more than expected in revenues and profits from the adverts that it sells alongside search results and places on other people's websites, netting profits of $1.07bn in the three months to 30 September. That is 46 per cent higher than in the same period last year and was better even than the figures pencilled in by Wall Street forecasters after a round of upgrades in recent weeks.

The share price – which surged past $600 last week, barely three years after the company floated at $85 per share – was broadly flat in after-hours trading following the release of the results.

Responding to sometimes critical questioning from analysts on a company conference call last night, Eric Schmidt, the chief executive, said the rate of increase would not go up from here. The 2,130-strong increase in headcount in the quarter, which took the number of Google employees around the world to 15,916, was the result of the acquisition of Postini and the hiring of 1,000 university graduates at the end of the academic year, he said.

"The numbers you are seeing are essentially a hangover from hiring agreed to many, many months earlier. The important thing is we did in fact correct it, and you can be confident that we are paying a lot of attention to the headcount."

The UK business contributed $661m of the company's total $4.23bn in revenues in the quarter, and Sergey Brin, co-founder, said Google had improved its search abilities in Russian and Arabic languages, helping to spur growth in other parts of the world.