updated 7/20/2006 7:40:04 PM ET 2006-07-20T23:40:04

Google’s second-quarter profit more than doubled, maintaining the Internet search leader’s penchant for topping analysts’ high expectations and further underscoring the advantage the company has built over its chief rivals.

The Mountain View, Calif.-based company said Thursday that it earned $721.1 million, or $2.33 per share, during the three months ended in June. That compared with net income of $342.8 million, or $1.19 per share, at the same time last year.

Excluding expenses for employee stock compensation and several other one-time items, Google said it would have earned $2.49 per share — well above the average estimate of $2.22 per share among 32 analysts surveyed by Thomson Financial.

Google’s second-quarter contrasted sharply with the second-quarter performance of Yahoo Inc., which disappointed investors earlier this week by merely matching Wall Street’s consensus estimate and then exacerbated the letdown by postponing a key piece of advertising technology aimed at boosting its revenue.

It marks the seventh time in eight quarters as a public company that Google has soared past the earnings hurdle set by Wall Street, even though its management insists the search engine isn’t being steered by investors’ relentless push for higher profit.

Revenue for the period totaled $2.46 billion, a 77 percent increase from $1.38 billion a year ago.

Google’s revenue fell to $1.67 billion after subtracting commissions paid to its partners in the Internet’s largest advertising network.

The post-commission revenue figure was just $26 million above the average analyst estimate, a narrow margin that appeared to affect investors’ response to the results, which came out after the stock market closed Thursday.

“It looks like our model continues to work very well,” Google Chief Executive Eric Schmidt said during a Thursday conference call with analysts. “It’s another good day and another good quarter for Google.”

A slightly lower tax rate helped propel Google beyond analyst estimates. The second-quarter tax rate was 26 percent, below Google’s estimated rate of as much as 30 percent for the entire year.

Because the company’s tax rate was 27 percent during the first quarter, Google’s rates will rise during the next six months if the full-year rate turns out to be as high as 30 percent. A higher tax rate would slow the company’s earnings growth.

Google also reiterated its commitment to invest heavily in new computers, new employees and more buildings to accommodate a rapidly expanding work force. The nearly 8-year-old company hired another 1,152 employees during the past three months to increase its payroll to 7,942 workers.

Bulging with $9.8 billion in cash through June, Google’s wallet can easily absorb the spending.

Meanwhile, Google seems determined on widening its already formidable lead in Internet search — a field that it has dominated so thoroughly that the company’s name has become accepted as an English verb for looking things up.

In an interview Thursday, Schmidt said Google’s engineers made 14 different changes to the search engine’s formula during the second quarter in an effort to display more relevant ads and spur more revenue-generating clicks by Web surfers. “It is powering a full blast,” Schmidt said of the search engine’s advertising formula.

Through June, Google held a 44.7 percent share of the U.S. search engine market, up from 36.9 percent at the same time last year, according to comScore Media Metrix. Yahoo ranked a distant second at a 28.5 percent share, comScore said.

Google’s Web sites also have been attracting more new users than Yahoo, Microsoft Corp. and Time Warner Inc. — the owners of the Internet’s most trafficked Web sites.

In the second quarter, Google’s U.S. audience averaged 95.2 million per month, a 25 percent increase from last year, according to Nielsen/NetRatings Inc. Although they still ranked ahead of Google with average monthly audiences of more than 100 million, Yahoo, Microsoft and Time Warner only registered annual growth rates ranging from 4 percent to 9 percent.

Drawing more people to its site is important to Google because the company make more money when ads are clicked upon there. Google generated $1.43 billion of its second-quarter revenue from activity on its own site, a 94 percent increase from last year.

Google is hoping to lure even more visitors by striking partnerships with other technology companies to drive traffic to its search engine.

Without providing details, Schmidt indicated the deals will be similar with a recent alliance formed with Dell Inc., which has agreed to install Google’s toolbar and other software on its computers for an undisclosed fee.

“The opportunities before us really are unlimited,” Schmidt told analysts.

Debate is raging over whether Google — which enjoys growth rates three-to-four times faster than other major Internet companies — is vulnerable to slowing industry growth trends or is itself a disruptive force taking share from rivals. On Tuesday, rival Yahoo Inc. postponed an upgrade to an advertising system designed to compete with Google and its shares suffered its biggest one-day percentage decline ever.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 2.78%
$30K home equity loan FICO 5.78%
$75K home equity loan FICO 4.54%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.57%
13.57%
Cash Back Cards 17.91%
17.91%
Rewards Cards 17.15%
17.15%
Source: Bankrate.com