Google keeps on chuggin'

SAN FRANCISCO — Google — the search engine that could — apparently still can after churning out another quarter of astounding earnings and revenue growth likely to propel its stock to new heights.

The third-quarter results, released Thursday, surpassed analyst expectations and demonstrated why Google has emerged as Silicon Valley's most prized company with a market value of more than $200 billion after just nine years in business.

"We're strong and getting stronger," Google Chairman Eric Schmidt said in an interview Thursday. "What I am most pleased about is our model works."

Investors are happy, too. Google shares surged to a new high of $658.49 in Friday's morning trading before dropping back to close at $644.71.

The healthy boost thrust the Mountain View-based company's market value even further ahead of Cisco Systems Inc.'s in Silicon Valley's pecking order.

Microsoft Corp., which started when Google co-founders Larry Page and Sergey Brin were still toddlers, is now the only high-tech company worth more than the Internet search leader.

As it has been for several years, Google reaped the benefits of running the Internet's most popular advertising network as more marketing dollars shift to the Web from television, radio, newspapers and magazines.

Meanwhile, long-established media are suffering. For instance, third-quarter advertising revenue at three major newspaper publishers — Gannett Co., McClatchy Co. and Dow Jones & Co. — declined by a combined $125 million, or 6 percent, from the same period last year.

Chris Winfield, who runs the search engine ad firm 10e20, says Google has become the Internet's equivalent of the Beatles during that rock group's heyday in the 1960s. "It's pretty amazing. It's almost like they are in control of the world."

In the third quarter, Google earned $1.07 billion, or $3.38 per share, for the three months ended in September. That was up from net income of $733.4 million, or $2.36 per share, at the same time last year.

The performance represented a return to form for Google after its second-quarter earnings disappointed Wall Street. The company has surpassed analyst estimates in all but two of the 13 quarters since its August 2004 initial public offering. As a result, Google's stock price has increased more than sevenfold since the IPO.