Google Profit Soars on Ad Sales

 
 
By Matthew Hicks  |  Posted 2005-02-01
 
 
 
Profits and revenues continued to soar for Google as it posted its second quarterly earnings report since becoming a public company.

The search company reported Tuesday that its revenue doubled both for the fourth quarter ended Dec. 31 and for the 2004 calendar year. Revenue reached $1.03 billion in the fourth quarter and $3.19 billion for the year.

Profits rose even higher. For the quarter, net income reached $204 million, or 71 cents a share, compared with $27 million, or 10 cents a share, for the same period a year earlier. Profits for 2004 jumped 278 percent to $399 million from $106 million a year earlier.

Google attributed its booming earnings to a strong market for its search-based advertising programs. With the ad increase, Google has become the largest generator of online ad revenue on the Internet, said George Reyes, Googles chief financial officer.

"Were extremely pleased with this quarter," said Eric Schmidt, Googles chairman and CEO. "Google will continue to take risks and to make investments for the long term."

Click here to read about Google becoming a domain-name registrar.

Schmidt said Googles earnings growth resulted from a significant increase in traffic to Googles sites and to those of its partners, as well as from the companys improved ability to generate revenue through its ad programs.

Google offers advertising through its AdWords program, which lets advertisers bid on keywords and pay when a user clicks on a sponsored link. It also provides the sponsored links to partner sites through its AdSense program.

Read more here about Google opening AdWords to developers.

Ad revenues for the quarter were almost split between those generated from Googles own Web sites and those generated through partner sites running its ads.

Google reports its earnings without subtracting the portion of revenues it shares with partner sites, what it calls traffic acquisition costs. Those payments totaled $378 million for the fourth quarter.

Mountain View, Calif.-based Google ended the quarter with 3,021 employees, 353 more than a quarter earlier.

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