Ouch!
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201107141644dowjonesdjonline000575&title=google-2q-profit-rises-36%25widely-beats-expectations
Google 2Q Profit Rises 36%, Widely Beats Expectations
Google Inc.'s (GOOG) second-quarter earnings rose 36% and widely beat expectations, as the Internet giant reported record-high revenue and more sedate cost growth.
Shares were up 12% to $592.77 in after-hours trading. Through the close, the stock had fallen 11% this year, while the wider market has risen.
Total costs climbed 38%, a slightly faster clip than the latest period's revenue growth, but tamer than the first quarter's 46% gain in costs. Previously, Google's surging investment in new products, advertising, hiring and worker compensation had hurt profitability.
Search ads--the company's primary source of revenue--continued to strengthen. U.S. paid clicks, a measure of how frequently consumers click on its ads, were up 18% compared with a year earlier and 2% sequentially.
The average cost that advertisers paid Google per click grew 12% over a year earlier and 6% from the previous quarter. That is a higher rate of growth than recent periods.
The results are the first with co-founder Larry Page firmly installed as chief executive. Page reorganized top management soon after he took the reins earlier this year, a bid to improve Google's agility and innovation. But since his terse appearance on the first-quarter conference call, he has stayed out of the spotlight.
Thursday, Page said in a release that Google had a great quarter, noting the top line hit a record high. "I'm super excited about the amazing response to Google+ which lets you share just like in real life," he said, referring to the company's nascent social-networking push.
Google posted a profit of $2.51 billion, or $7.68 a share, up from $1.84 billion, or $5.71 a share, a year earlier. Excluding stock-compensation costs and income-tax effects, profit rose to $8.74 from $6.45 a share.
Revenue increased 32% to $9.03 billion. Traffic-acquisition costs, commissions paid to marketing partners, comprised 24% of ad revenue. After the costs, revenue rose 36% to $6.92 billion.
Analysts surveyed by Thomson Reuters expected earnings of $7.85 a share on revenue of $6.55 billion after traffic-acquisition costs.
Gross margin rose to 64.9% from 63.8%.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; joan.solsman@ dowjones.com
(END) Dow Jones Newswires
07-14-111644ET
Copyright (c) 2011 Dow Jones & Company, Inc.