Analysts have been revising down their expectations for Google’s (GOOG) third quarter for weeks. The search company did not have much to measure up to. A slowing economy moved consensus estimates to EPS of $4.76 for the period just finished on revenue of $4.06 billion. For the year, the expected numbers are $19.36 on $16.05 billion.
Google traded down much of the day along with the market but rallied at the end.
Google’s third quarter revenue was $5.54 billion compared to $4.23 billion last year. Traffic acquisition costs were $1.5 billion so the company hit revenue estimates.
EPS for the third quarter of 2008 was $4.24.
GAAP operating income for the third quarter of 2008 was $1.74 billion, or 31% of revenues. This compares with GAAP operating income of $1.58 billion, or 29% of revenues, in the second quarter of 2008.
Google-owned sites generated revenues of $3.67 billion, or 67% of total revenues, in the third quarter of 2008. This represents a 34% increase over third quarter 2007 revenues of $2.73 billion and a 4% increase over second quarter 2008 revenues of $3.53 billion The company makes more money on this revenue that it does advertising on other sites, so this should be considered good news.
The remarkably good news was that aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 18% over the third quarter of 2007 and increased approximately 4% over the second quarter of 2008.
Operating expenses, other than cost of revenues, were $1.63 billion in the third quarter of 2008, or 29% of revenues, compared to $1.64 billion in the second quarter of 2008, or 31% of revenues. Wall St had been concerned that spending was getting out of hand. This proved otherwise.
Shares were up sharply after hours to $390 against a close of $353.
Douglas A. McIntyre