Google jumps on strong ad sales, cost controls

Efforts to boost web traffic and trim costs paying dividends

SA N FR A NCISCO • Google parent

is selling more ads and keeping spending under control, fuelling better-than-projected sales and profit in the latest quarter. The shares jumped as much as 8.6 per cent.

Revenue, excluding sales passed on to partners, rose 15 per cent to US$15.1 billion in the third quarter, the company said in a statement Thursday, exceeding analysts’ average estimate for US$15 billion, according to estimates compiled by Bloomberg. Profit, excluding some items, was US$7.35 a share, beating predictions of US$7.20.

Chief executive Larry Page is adopting a new holding company called Alphabet to separate Google’s main operations from various new endeavours, but the latest figures are still being reported in line with past quarters — before the final transition in the coming months.

The key challenge for Mountain View, Calif.-based Google is to con-

There certainly is a shift and they need to figure out how to monetize it better

trol spending on initiatives to boost web traffic, which are aimed at making up for declining ad prices on mobile devices. Those efforts are paying off, with total clicks on ads up 23 per cent, even as the average price for an ad fell 16 per cent.

“It’s moving in the right direction,” said Kerry Rice, a senior analyst at Needham & Co. who has a buy rating on the stock.

“There certainly is a shift and they need to figure out how to monetize it better.”

Under Alphabet, Google’s searchad business is one among many. Other initiatives range from computers and fast-Internet services, to projects such as like product-delivering drones, life sciences products, airborne wind turbines and selfdriving cars.

While the new areas have yet to bring in sales to rival Google’s core operations, they’re being given room to operate as distinct units under a new operating structure. At the same time, chief financial officer Ruth Porat has tempered this expansion by focusing on controlling costs.

Third-quarter net income was US$2.74 billion, compared with US$3.98 billion a year earlier.