Google stock surges in after hours trading as Q3 earnings top Wall Street

Late Thursday, Google reported financial earnings for the third quarter of this fiscal year, reporting a strong surge in total profits.

Google’s total revenue for Q3 2010 was up 23-percent over the same period last year to $7.2-billion (or $5.5-billion net of partner fees).

The company reported $2.17-billion in net income ($6.72 per share), up a significant 32-percent from the same period last year.

Both revenue and total profits exceeded market expectations, with Wall Street analysts expecting earnings of $6.69 per share.

The company more recently began diversifying into other segments, including by building its own open source operating system, Google Android, and even venturing into renewable energy.

 Analysts forecasted lower earnings on the assumption that soaring costs associated with financing new projects would lead to lower gross profits.

Google said advertising clicks were up 16-percent over the same period last year, and the average cost per click for advertisers was also up in the period, helping to boost earnings. That also indicates the economy is performing better as discretionary online advertising spending has increased.

Google generates more than 95-percent of total revenue from its online advertising business.

The unexpected increase in online advertising revenue helped to hide the extensive capital expenditures associated with financing the new project developments, helping to boost aggregate earnings.

The market viewed Google’s latest initiatives as highly volatile and without certain positive net present values as the company began to shift away from its core business.

The company said in a statement that its emerging revenue streams, including revenue from mobile devices, continues to see strong momentum.

Google does not normally segregate earnings based on specific revenue streams, but for the first time said $1-billion was generated from advertisements from mobile devices, according to Jonathan Rosenberg, the VP of product management, during a conference call late Thursday (video embedded below).

Google currently has 66-percent market share of the U.S. online search market, compared to top rival Yahoo who has about 17-percent, with Microsoft’s Bing search engine at about 11-percent.

Google did not disclose whether YouTube is now profitable, instead opting to generally say that the site, which is the most popular video sharing site in the world, is now serving 14-billion videos each week.

Google executives previously said they expect the service to become profitable soon, but that has yet to be confirmed.

In the third quarter, Google added 1,500 new employees, bringing the total number of people employed at the company to about 23,000 people.

Google also completed 23 acquisitions in Q3.

The Google stock (NASDAQ:GOOG) closed down about half a percent from the opening price at $541 per share in Thursday’s trading session.

Fast-forward to after hours trading, the stock is currently trading up about $49.07 per share (about 9-percent up), bring each share to $590, a price range the Google stock last saw in April 2010.