Google Off to the Races

Updated from 7:21 a.m. EDT

Google's(GOOG) well-oiled money machine keeps humming.

Shares jumped more than 3% early Friday in the wake of the search giant's latest earnings blowout. The $16.35 gain to $488 puts the stock back in striking distance of $500, a level Google hasn't touched since January.

First-quarter profit before items jumped to $3.68 a share on revenue of $2.53 billion, excluding the money Google shares with advertising partners. Analysts surveyed by Thomson Financial were looking for a profit of $3.30 a share on net revenue of $2.49 billion.

The 38-cent beat marks an upside surprise of 11.5%. During the last two quarters, Google beat analysts' expectations by only about 8%. The company hadn't beaten estimates by this margin since the June 2006 quarter, when it came in 12% ahead.

But investors have become well-accustomed to Google's habit of making Wall Street estimates look timid. Shares moved up $13.20, or 2.8%, in after-hours trading to $484.85, reversing a drop of about $4 the stock felt in the regular session.

While Google continued to announce a spate of new products and partnerships over the quarter, CEO Eric Schmidt drew attention to the search ad business that still makes up the overwhelming majority of Google's revenue during a conference call for investors.

"Sometimes I worry we talk so much about new things that we forget to talk about our core business," Schmidt said. "But it's the strength of that business that allows us to take calculated risks with new products." "Targeted and effective advertising continues to be our mantra," Schmidt said. "The benefit to the user is the most important thing we focus on." However, Schmidt did caution investors that the approaching summer season tends to be its slowest.