Google profits go up in Q3 2009, plans to invest in a big way in future growth

The internet and search engine leader Google Incorporated has said its third-quarter profits have gone up from a year ago, propelled mainly by higher revenues from advertising.

In fact, the quarterly adjusted earnings and quarterly revenues of Google surpassed the expectations and predictions made by industry analysts – and this happened despite the global economic recession.

In a press release, Google said it is planning to invest “heavily” in its future growth.

In what is seen by analysts as a “potential indicator” for the trend of the internet advertisement market, Google registered a growth of almost 8% in the department of advertising revenues. Experts also regard this as a positive sign of economic resurgence, which, in turn, egg on the demand for internet advertising.

According to these analysts, in the third quarter of 2009, the widespread use of smart-phones pushed Google’s mobile searches up by as much as 30% from the second quarter. More smart-phones will lead to more people on the internet, and Google benefits from more people on the internet.

Mobile phones, one analyst said, are generating new kinds of searches based on the location of the searcher, adding that Google is investing in mobile search in a big way.

Google’s positive results for the third quarter of 2009 included a charge pertaining to a stock-based compensation amounting to $318 million, compared to $280 million a year before. The tax benefits related to the stock-based compensation came to $73 million in the third quarter of 2009 – up from the $63 million over a year earlier.

In 2008, Google had entered into an agreement with the Authors Guild and the Association of American Publishers (AAP). If this deal is approved, Google will make payments that come to a total of about $125 million.

On a non-GAAP (generally accepted accounting principles) basis, the search-engine giant’s net income increased to $1.88 billion (or, $5.89 per share) from $1.56 billion (or, $4.92 per share) in the third quarter.

The GAAP operating income of Google in the third quarter stood at $2.07 billion (or, 35% of revenues), compared to $1.65 billion (or, 30% of revenues) in the third quarter of the previous year.

The company’s non-GAAP operating income in the third quarter of 2009 was $2.39 billion (or, 40% of the revenues) – up from $2.02 billion (or, 37% of the revenues) in the third quarter of 2008.

Google’s gross revenues in the third quarter of 2009 went up by 7% to $5.94 billion from $5.54 billion in the third quarter a year earlier. And, with the exclusion of Traffic Acquisition Costs, the company’s revenues for the third quarter climbed by 8% to $4.38 billion from $4.04 billion in the same period in 2008.

Eric Schmidt, chief executive officer of Google, commented thus on the company’s gainful results for the third quarter of 2009: “Google had a strong quarter; we have had a 7% growth in revenues year-over-year in spite of the tough economic conditions.”

Schmidt also said that Google will make acquisitions – both small and large – and that it hopes to get a test version of its Chrome Operating System available to developers later in 2009. He claimed that the Chrome Operating System is “faster and more efficient” than the current operating systems, including Microsoft Windows and Linux.