Google Blows the Doors Off

Updated from 4:31 p.m.

Google (GOOG Quote) walloped first-quarter earnings estimates Thursday, sending its shares up 6%.

The Mountain View, Calif., search giant made $2.29 a share on a pro forma basis, excluding certain costs. Net revenue, excluding the fees that Google shares with its search ad partners, was $1.53 billion.

Analysts were expecting a profit of $1.98 a share on net revenue of $1.44 billion, according to Thomson Financial.

For the quarter ended March 31, Google made $592 million, or $1.95 a share, up from the year-ago $369 million, or $1.29 a share. Gross revenue rose 79% from a year ago and 17% sequentially, to $2.25 billion.

"We basically have good news across the board,'' CEO Eric Schmidt said on the company's postclose conference call with investors. "Europe is doing extremely well for us.

"It looks like to us that we are continuing to gain market share,'' Schmidt added.

Investors were duly impressed with the blowout performance, which came just a quarter after Google's first-ever earnings-related black eye. A steep shortfall reported Jan. 31 sent the stock into a tailspin from which it has yet to fully recover.

"True to form, they continued to grow and outgrow what the Street had been looking for,'' says Jeff Kampner, sector manager at Solaris Asset Management, which owns Google shares. "It looks like the margins held up nicely. That's the part I am surprised by.''

"Looks good, sequential revenue way better than initial Street estimates,'' says Mike Binger, a fund manager at Thrivent Financial, which owns Google shares. "Both Google and Yahoo! (YHOO Quote) are confirming search is still strong and growing fast. The big fear on Google was the expenses, and the EPS went a long way to lowering those anxities."

Google's blowout quarter came a day after Yahoo! surged 8% on the heels of its own solid report.