Google Kicks “Assets” on Earnings (GOOG)

What advertising recession? What advertising slowdown?  Google Inc. (NASDAQ: GOOG) just rocked the house on earnings.  It may have been punished after July’s earnings report but that is far from the case today. 

Gross revenue rose 33% from a year earlier to $9.72 billion for its third quarter, but if you back out the Traffic Acquisition Costs of $2.21 billion then Google’s revenues were $7.51 billion.  Google’s adjusted earnings were $9.72 EPS.  Thomson Reuters was only expecting $8.74 EPS and $7.21 billion in ex-TAC revenues.

Here are some of the highlights and factoids for this past quarter for comparison:

• Google-owned sites generated revenues of $6.74 billion, or 69% of total revenues.
• Google+ has now passed the 40 million user mark.
• Google’s partner sites (Google Network Revenues) generated revenues through AdSense programs of $2.60 billion, or 27% of total revenues.  Up 18%.
• International Revenues were 55% of the total revenues at $5.3 billion.  This was 54% in the second quarter of 2011 and 52% in the third quarter of 2010 as far as percent of revenues.
• Paid Clicks rose about 28% over the third quarter of 2010 and increased approximately 13% over the second quarter of 2011.
• Average cost-per-click rose about 5% over the third quarter of 2010 and decreased approximately 5% over the second quarter of 2011.
• Other Cost of Revenues rose to $1.17 billion, or 12% of revenues, compared to $747 million or 10% of revenues a year earlier. Operating expenses were $3.28 billion (34% of revenues).
• Google’s effective tax rate was 19% for the third quarter of 2011.

Net cash provided by operating activities was $3.95 billion versus $2.89 billion a year earlier.  As of September 30, 2011, cash, cash equivalents, and short-term marketable securities were $42.6 billion.

The global Headcount is now 31,353 full-time employees as of September 30, 2011, up from 28,768 full-time employees as of June 30, 2011.

We recently noted that Google was one of twelve stocks which had more implied upside than Apple.  The problem is that was over $50.00 ago!  Google closed up 1.9% at $558.99 today and shares are up around $591.00 in the after-hours session.

For online ad-related companies, game-on!

JON C. OGG