Google executives told financial analysts Thursday that revenues rose seven percent year over year to $5.94 billion in the third quarter, easily beating expectations on Wall Street. Net income climbed 27 percent to $1.64 billion, or $5.13 a share, compared to $4.06 per share in the year-earlier period.
Google CEO Eric Schmidt said the strong results give the search giant the confidence to immediately begin stepping up investments in personnel, acquisitions and innovation.
"While there is obviously a lot of uncertainty about the pace of economic recovery  , we believe the worst of the recession is behind us and we're seeing lots of signs of that in all of the industries that we pay attention to," Schmidt told investors. "We now have the business confidence to invest heavily in the next phase of innovation."
Boosting Search Quality
Seeing "huge opportunities ahead," Schmidt said Google has the resources and expertise to invest in long-term growth. "We're already stepping up our hiring," he said, but "the technological precondition for growth, if you will, is this investment in innovation."
One ongoing company goal is to get to the perfect Google search engine. "We made about 120 search-quality improvements in the third quarter with more, of course, coming this quarter, and then we hope every quarter," Schmidt said. "And we're working to create much better ads. Many of our advertisers would like to find more ways to spend money with Google if our products would allow them to do that -- and we want to make that possible."
Google's investment push includes the development of new ad formats, such as the local listings the company is already beta-testing in San Francisco and San Diego, Calif. For this, users basically sign up with just a simple one-page form without having to deal with keywords or manage bids, said Senior Vice President Jonathan Rosenberg.
"There's a simple flat monthly rate, and if you don't have a Web page, the ad can link to your place page -- a free page that we generate and you can edit" that "has all sorts of information about your business," Rosenberg said.
Google has already launched about 50 million of these place pages, and the phone numbers on the ads go through Google Voice. According to Rosenberg, this enables businesses to actually track the calls they receive and know which ones were generated by their Google ads. (continued...)
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