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Google's Beats the Street in Q3, Talks Up Google+

 & Damon Poeter Reporter

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Google on Thursday beat Wall Street estimates with big year-over-year gains in sales, profits, and earnings per share for its fiscal third quarter, but CEO Larry Page and his team spent a big chunk of the company's earnings call with analysts talking up Google+, the new social networking platform that isn't contributing all that much to those boffo numbers as of yet.

"We are still at the very early stages of what technology can deliver," Page said. "These tools that we're building online in five years time will look very different. We're building those tools with Google+."

Such statements contribute to the sense that Google is taking evolving online business models, and particularly its rivalry with social media giant Facebook, very seriously indeed. Perhaps even more seriously than the continued, indeed still increasing, profitability of its established modes of business.

Google's traditional revenue drivers, search services and advertising, accounted for the lion's share of the company's $9.72 billion in sales for the quarter ended Sept. 30, up 33 percent as compared with the third quarter of 2010. Taking out ad sales that Google shares with its partners, the company still had revenue of $7.5 billion, beating average analyst forecasts in the $7.2 billion range.

The company delivered EPS of $8.33 to shareholders, up from $6.72 in the third quarter of 2010, on net income of $2.73 billion, up from $2.17 billion in the year-ago period. Google's mobile business is also growing, highlighted by the explosive growth of the company's Android mobile operating system for smartphones, tablets, and other mobile devices.

"We see Android going gangbusters," Page said. "We're very excited about the Android ecosystem and our growth in that."

Yet as happy as Page was to talk up specific money-making businesses like Android and YouTube, or dive into the raw fiscal numbers with analysts on Thursday, he kept bringing the discussion around to Google+.

"Google+ is now open to everyone and we just passed the 40 million user mark," he said, referring to Google's opening of its social networking site to the general public on Sept. 20. "People are flocking into Google+ at an incredible rate and we are just getting started."

But Google still has plenty of work ahead with Google+ in order "to make it simple, almost auto-magical" for users, according to Page, who concluded the call by encouraging financial analysts to "try Google+, to flock to it."

Google launched Google+ to a limited audience on June 28. The growth of the social service's user base has been impressive, but it's still dwarfed by Facebook's estimated 800 million users.

And there is a perception that the company, culturally driven to build its own products from the ground up internally, is struggling to keep up in a more socially driven world of online business where success is found in fostering massive ecosystems of third-party developers and partners.

One Google engineer this week accidently made public a Google+ post intended for internal distribution in which he detailed at great length the difficulty, given Google's deeply ingrained, product-driven culture, of developing a platform like Facebook's that attracts third-party developers.

About Our Expert

Damon Poeter

Damon Poeter

Reporter

Damon Poeter got his start in journalism working for the English-language daily newspaper The Nation in Bangkok, Thailand. He covered everything from local news to sports and entertainment before settling on technology in the mid-2000s. Prior to joining PCMag, Damon worked at CRN and the Gilroy Dispatch. He has also written for the San Francisco Chronicle and Japan Times, among other newspapers and periodicals.

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