Buoyed by strong holiday, Google earnings give tech market hope

Google posted better-than-expected results today as it continued to experience strong growth in its core search business, thanks to a stronger-than-expected holiday shopping season.

Revenues for the fourth quarter were $6.67 billion, up 17 percent from a year ago. Earnings were $1.97 billion, up from $348 million a year earlier. Earnings per share were $6.13, up from $1.21 a year earlier. Non-GAAP earnings per share were $6.79, up from $5.10 a year ago. Analysts expected non-GAAP earnings of $6.48 a share for the fourth quarter, according to Thomson Reuters. Revenue was expected to be $4.92 billion, excluding traffic acquisition costs of $1.72 billion. Hence, the $6.67 billion revenue figure compares to expected $6.64 billion.

Those results should cheer investors. eBay reported solid earnings yesterday, and comScore said that online holiday sales were up 5 percent compared to a year ago. comScore said that Google had 65.7 percent of the U.S. search market share in December, up from 65.5 percent in November.

The Mountain View, Calif.-based company is closely watched as its fortunes mirror the state of the Internet economy. Google has had sterling results during the recession, but investors may be nervous now because of the company’s fight with China over cybersecurity and censorship. The dispute widened today as Secretary of State Hillary Clinton called on China to investigate the attacks that breached Google’s network.

If Google is forced to exit China, it could lose revenues, and that would worry its investors. Meanwhile, another concern is that Google’s NexusOne cell phone, which runs its Android operating system, hasn’t sold that well.

“As we enter 2010, we remain hugely optimistic about the internet and are continuing to invest heavily in technological innovation for the benefit not only of our users and customers, but also the wider web,” said Eric Schmidt, chief executive of Google in a statement.

Google’s own sites generated revenues of $4.42 billion, or 66 percent of total revenue, up 16 percent from a year ago. Google Network revenues from its partners were $2.04 billion, or 31 percent of revenue. That was up 21 percent. International was 53 percent of total revenue.

Paid clicks, which include clicks related to ads served on Google sites and the sites of its partners, were up 13 percent from a year ago and 9 percent from the third quarter. Traffic acquisition costs were $1.72 billion, compared to $1.48 billion a year ago. Traffic acquisition cost was 27 percent of total revenue. Google’s cash and cash equivalents are now $24.5 billion. The company has 19,835 employees, up slightly from 19,665 in the third quarter.