Google profits rocket 300 per cent

Profits at search engine giant Google's have jumped more than 300 per cent in the second quarter this year, driven by continued growth in web advertising.

The internet bellwether posted a net income of $342.8m on total revenue of $1.38bn for the three months ended 30 June.

That compares with a net income of $79m on revenue of $700m in the same period a year earlier.

Excluding $494m in traffic acquisition costs, the portion of revenue shared with partners, Google posted revenue of $890m, beating analyst estimates.

Google shares were down $18.14 to $295.80 in after-hours trading after closing at $313.94. "The combination of high expectations going into the quarter and cautionary comments from management about the next quarter" may have pushed the stock down after hours, said David Edwards, an analyst at American Technology Research.

Google, as a matter of policy, does not provide financial guidance, but "they were clearly providing cautionary commentary," said Edwards.

On a conference call with analysts, Google CFO George Reyes warned that third-quarter results might be weaker than the second quarter because web surfing decreases during August summer holidays in Europe.

Executives were clearly upbeat about the most recent quarter, however. "We are very proud of our results. Business is very good here at Google," said chief executive Eric Schmidt. "It's really because we've figured out ways to stay focused on end users and innovation."

Nearly all of Google's revenue comes from advertisements that appear on search results pages and on partner sites. The company also has rolled out a bevy of new products and services to expand its web search leadership, like Google maps and localised and video search.

The company has had three blow-out quarters since going public last year, each time beating analyst estimates and each time followed by a rise in the stock in after-hours trading.

Google posted a first-quarter profit in April that was almost six times higher than a year earlier. In February, the company's fourth-quarter profit rose more than 100 per cent year over year. Last October, the company's third-quarter profit more than doubled.

Meanwhile, Google's share price has skyrocketed, reaching a peak at above $300 a share for the first time last month, making it the world's biggest media group by stock market value. Google's reach continues to grow. The search giant attracted more than 78.5 million US visitors last month, up 25 per cent from a year ago, while the Google and Blogger brands ranked number one in search and web hosting, respectively, according to recent figures from Nielsen/NetRatings.

On Tuesday, Google's chief rival, Yahoo!, posted a higher second-quarter profit, but its revenue fell short of analyst expectations. The news sent Yahoo! shares down as much as 10 per cent in after-hours trading.

Elinor Mills writes for CNET News.com