Google Is Faster Than You

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Google (Nasdaq: GOOG  ) is back to its winning ways.

Three months after stunning investors with a rare quarterly miss, the world's leading search engine is blazing past the pros again.

Google's third-quarter revenue climbed 23% to $7.3 billion, fueled primarily by a 16% surge in ad clicks -- and advertisers willing to pay 3% more for the average Google-generated lead than they did a year ago.

Despite a hiring spree and a flurry of new products, margins improved all the way down to the bottom line. Earnings grew 30% on a per-share basis, to $7.64. Analysts were settling for a profit of $6.67 a share.

The news gets even better:

  • Non-text display advertising has reached an annual run rate of $2.5 billion.
  • Mobile ads are adding $1 billion in annual revenue.
  • YouTube's now making money off 2 billion of its weekly views -- 50% more than last year's total. This is roughly 15% of the video-sharing site's total views, so there's upside here, regardless of the site's organic growth.

Google had no problem growing during the recession, so it's not a surprise to see Big G doing well now. Just don't assume that its strong results signal similar strength at Yahoo! (Nasdaq: YHOO  ) , or to a lesser extent Microsoft's (Nasdaq: MSFT  ) Bing. Google has managed to fare well even while Yahoo! languishes.

Google obviously isn't growing as quickly as Chinese darling Baidu (Nasdaq: BIDU  ) , but that's more than baked into both companies' share prices. Google closed yesterday at just 20 times this year's projected profitability -- and that target will obviously be jacked higher by analysts this week. Baidu carrier a much loftier valuation.

Big G appears to be doing everything right these days. Think about that $1 billion in mobile revenue. True, Google is giving away its Android operating system to handset makers -- unlike the proprietary Apple (Nasdaq: AAPL  ) and Research In Motion (Nasdaq: RIMM  ) platforms -- but the company would likely be generating quite a bit less than $1 billion in mobile advertising without Android.

The company refused to divulge whether YouTube itself is currently profitable, but if it's not, it can't be too far away.

As good as things are going for Google now, the near term seems likely to get even better.

What should Google do with its hefty $33.4 billion cash pile? Share your thoughts in the comment box below.

Google and Microsoft are Motley Fool Inside Value choices. Baidu and Google are Motley Fool Rule Breakers selections. Apple is a Motley Fool Stock Advisor recommendation. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Longtime Fool contributor Rick Munarriz still uses Google a lot in his daily life. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

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