Google Trounces Estimates

Shares of Google leapt 9% to a new all-time high after the close Tuesday after the company beat earnings and revenue estimates handily.

Net revenue — or revenue before traffic acquisition costs — was $654 million, well above $589 million analyst estimates and up 30% sequentially. Net income was $204 million, up 655% year-over-year. Pro forma earnings, or earnings after certain expenses such as stock compensation, were 85-92 cents a share, depending on the analyst, trouncing 77-cent estimates.

Strong holiday traffic, higher advertising rates, better results tracking, more corporate advertising dollars and new partners and affiliates contributed to the blow-out results, as the company did just about everything right in the quarter.

“Google had an exceptional quarter,” stated CEO Eric Schmidt. “Revenues and profits increased significantly, our execution was solid across the company, and most importantly, our relationship with our users, partners and advertisers became even stronger. All of this happened while we continued to innovate, expand around the world and make strategic, long-term investments.”

The company also did its best to maintain an entrepreneurial environment, handing out millions in the quarter for employee innovations. The result is a company that so far has been worth its lofty stock market valuation.

Also after the close, Adobe raised guidance, and Monster beat estimates.

Stocks rose during the day ahead of Wednesday’s Federal Reserve decision on interest rates. Strong construction spending and manufacturing reports contributed to gains.

The Nasdaq rose 6 to 2068, the S&P 500 climbed 8 to 1189, and the Dow gained 62 to 10,551. Volume rose to 1.71 billion shares on the NYSE, and 1.9 billion on the Nasdaq. Advancers led 22-10 on the NYSE, and 17-13 on the Nasdaq. Upside volume was 70% on the NYSE, and 59% on the Nasdaq. New highs-new lows were 363-12 on the NYSE, and 131-39 on the Nasdaq.

Ariba and Avanex were battered on disappointing results, and Internet Security lost 7% on disappointing guidance.

Nortel gained 3% after the company finally began to release its 2004 results. The company earned about a penny a share in the first six months of last year.

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