• by Shankar Gupta , October 20, 2006

Google's earnings continued to beat Wall Street's expectations, with its third-quarter profits nearly doubling from last year, the search giant announced Thursday at its quarterly earnings report.

Third-quarter net income rose to $733.4 million, or $2.36 per share--from $381.2 million, or $1.32 per share a year earlier--with revenue rising 70% to $2.69 billion. The per-share earnings of $2.36 soundly beat analysts' expectations of $2.13 per share.

Google sites generated $1.63 billion in the third quarter, up 84% from $885 million from the same period in 2005. The vast majority of Google site earnings come from its pay-per-click search ad business, according to company CEO Eric Schmidt. Revenue from Google affiliate sites using the AdSense program came to $1.04 billion, or 39 percent of total revenue--up from last year's earnings of $675 million.

Since its initial public offering in 2004, the company has failed to beat analyst's growth estimates only once, and has consistently shown double- and even triple-digit year-over-year growth.

During a conference call with investors and press, Google co-founder Sergey Brin said that the company didn't see any signs of a coming slowdown. When asked whether growth would inevitably slow once the "low-hanging fruit" had already been picked, Brin answered: "In a sense, you might say that the low-hanging fruit has been picked, but at the same time, we're also building ladders, and reaching for bigger things."

Schmidt touted the importance of the partnerships the company has made in recent months, including its search advertising deal with social networking site MySpace, as well as its recent acquisition of YouTube, which he described as "the ultimate partnership." Schmidt evinced few concerns about possible copyright lawsuit woes coming from the YouTube acquisition, saying that the search giant would "rigorously" adhere to the terms of the Digital Millennium Copyright Act.

Google's report came two days after Yahoo's lackluster earnings report. The company missed Wall Street's quarterly revenue target of $1.14 billion, reporting net sales of $1.12 billion--but stock rose 3 percent in after-hours trading driven by the announcement of the launch of Panama, Yahoo's new ad platform.