Google 's third-quarter profit is highest ever

SAN FRANCISCO --- Google Inc. shifted into a higher gear in the third quarter and began to leave the recession behind as the 11-year-old Internet search leader recorded its highest profit ever.

The results released Thursday are the strongest indication yet that the Internet ad market is bouncing back from its worst funk since the dot-com bust at the start of the decade.

Google is considered a good barometer for the state of Internet commerce because its search engine is the hub of the Web's largest adverting network.

"The worst of the recession is clearly behind us and because of what we have seen, we now have the confidence to be optimistic about our future," Eric Schmidt, Google's chief executive, told analysts in a conference call.

His optimism echoed his public remarks leading up to the earnings release. That sentiment has helped propel Google to a succession of new 52-week highs this week, a rally that continued after the company put out its third-quarter number.

Google's shares rose $16.44, or 3.1 percent, to $546.35 in extended trading. In regular trading earlier, shares fell $5.41, or 1 percent, to close at $529.91.

The Mountain View-based company said it earned $1.64 billion, or $5.13 per share, in the three months ended in September. That represented a 27 percent increase from $1.29 billion, or $4.06 per share, at the same time last year.

In other news

CITIGROUP provided a sobering reminder Thursday that the economy is still struggling, reporting that its third-quarter results were weighed down by billions of dollars in failed loans. The bank reported a $101 million profit before accounting for $288 million in preferred stock dividends and the debt exchange offer that gave the government a 34 percent stake in the bank. Including those items, the New York-based bank reported a $3.24 billion loss.

GOLDMAN SACHS GROUP INC.'S third-quarter earnings more than tripled from the depths of the financial crisis as income from the company's trading operations offset a drop in its investment banking business. Goldman's stock fell 2.5 percent Thursday as investors reacted to the slide in investment banking revenue, the result of a general slowdown in takeover activity. Shares fell $4.71 to $187.57 in afternoon trading. Goldman earned $3.03 billion, or $5.25 per share, easily beating analysts' expectations for a profit of $4.24 per share. The bank earned $810 million, or $1.81 per share during its fiscal third quarter last year, which ended in August.

CHARLES SCHWAB CORP. said it attracted new accounts, but its profit fell 34 percent as low interest rates and waivers on fees ate into revenue. Revenue fell 19 percent to $1.01 billion, just short of what analysts expected. The San Francisco-based brokerage said its took a hit as asset management and administration fees declined 24 percent to $451 million.

IBM CORP. jacked up its profit guidance for the second time this year, a sign of the company's confidence that it can profit more. IBM's sales fell 7 percent, and all its major divisions suffered declines. In IBM's third quarter, net income was $3.2 billion, or $2.40 per share, ahead of analysts' expectation for $2.38. In the same period last year, IBM's profit was $2.04 per share.

SOUTHWEST AIRLINES CO. reported a small third-quarter loss and said there's no rebound in sight for business travel. Dallas-based Southwest lost $16 million in the third quarter, or 2 cents per share. Not counting special items it would have shown a $23 million profit, or 3 cents per share, a penny ahead of the expectations of analysts surveyed by Thomson Reuters.

NOKIA CORP. reported a loss of 559 million euros ($835 million) in the third quarter, taking hits from a 20 percent drop in sales. Nokia made a profit of 1.09 billion euros ($1.6 billion) in the same quarter of 2008. The Finnish company's net sales in July to September dropped 2.39 billion euros ($3.6 billion) in the same period last year, Nokia said.

HARLEY-DAVIDSON INC. earned $26.5 million, or 11 cents per share, for the period ended Sept. 27, down from $166.5 million, or 71 cents per share, a year earlier. Third-quarter sales dropped 21 percent to $1.12 billion, but its retail motorcycle sales decline of 21.3 percent was not as steep as the previous quarter's decline.