Google Q2 revenue up 32 percent

Profits also rose as the company's core search advertising business performed well

Google's revenue and profit grew in the second quarter, as the company's core search advertising business continued to perform very well.

Total revenue grew 32 percent year on year in the second quarter, ended June 30, to $9.03 billion, the company said on Thursday.

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Subtracting fees and advertising commissions paid to partners, Google's net revenue came in at $6.92 billion, exceeding the $6.55 billion consensus expectation from analysts polled by Thomson Financial.

Net income was $2.51 billion, or $7.68 per share, compared to $1.84 billion, or $5.71 per share, in 2010's second quarter.

On a pro forma basis, which excludes certain one-time items, net income was $2.85 billion, or $8.74 per share, exceeding the $7.86-per-share analyst consensus expectation and topping the $2.08 billion, or $6.45 per share, earned in the second quarter of 2010.

People clicked on 18 percent more ads served by Google and its partners, and the average fee paid by advertisers for a click rose 12 percent, year on year.

"We had a great quarter," CEO Larry Page said during a webcast to discuss the results.

Most of Google's revenue -- 97 percent -- came from advertising, while the rest was generated by its emerging businesses, such as enterprise software and mobile.

Thanks to YouTube and DoubleClick, Google continues to make progress in display advertising, an area in which it had for years been a minor player. Google is now a leader in display advertising, along with Yahoo and Facebook.

The second quarter was Page's first full quarter as CEO, and already the company is seeing results from a shift in the management strategy to focus more on product development, he said.

Google is now paying more attention to the ease of use and the design of its products, he said, citing as an example the company's new social networking site Google+, launched in limited beta test about two weeks ago.

Although it hasn't been out for long, Page expressed satisfaction with the response that Google+ has received and said he is "super excited" about the site's future.

Although only users who receive an invitation can join the site, already there are about 10 million Google+ account holders, and they are sharing about 1 billion items per day. "That's a great achievement for the team," he said.

Use of the company's +1 button is growing fast on Google sites and elsewhere on the Web, as people click on it to tag links that they like and share them with others, he said.

Google+ and the +1 button are Google's responses to the massive success of the Facebook social networking site and its ubiquitous Like button. Google has high hopes that Google+ and the +1 button will let it compete better against Facebook in the social networking market, where success has eluded Google for years.

In conjunction with its emphasis on moving more quickly in product development, Google is also consolidating its product roster to close services that aren't performing well, he said, citing the recently eliminated Google Health. Page described this strategy as putting "more wood behind fewer arrows."

The company has only scratched the surface of its opportunities for growth, Page said.

The growth opportunities are both in its core search advertising business and in its emerging businesses, such as in mobile with its Android platform, enterprise software with the Google Apps suite and display advertising on sites such as YouTube, he said.

"We're only at 1 percent of what's possible," Page said.

Google also sees great potential in local advertising and e-commerce. In mobile, more than half a million Android phones are activated worldwide every day, and there are a total of 135 million Android devices worldwide, officials said. "Android is on a tear," Page said.

Google's Chrome browser is also doing well, with about 160 million users globally, he said.

Google sites generated 69 percent of total revenue, while partner sites contributed 28 percent. International markets accounted for 54 percent of the company's revenue.

At the end of the second quarter, Google had $39.1 billion in cash, cash equivalents and marketable securities, and 28,768 full-time employees worldwide.

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