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Google Beats Third-Quarter Revenue Estimates

Search continues to be Google's engine, but growth is coming from the company's other businesses, too.

Google on Thursday reported stronger-than-expected third quarter revenue, sending its stock up in after-hours trading.

The company's revenue grew 23% from what it was in the third quarter of 2009 to reach $7.29 billion. Earnings per share came in at $7.64, significantly higher than the $5.89 per share realized a year ago.

Google CEO Eric Schmidt said in statement that the company's core business grew very well and that its newer businesses, specifically display advertising and mobile advertising, showed ongoing momentum.

On a conference call for investors, Google CFO Patrick Pichette said the company was very pleased with its Q3 results and the company is committed to continued growth by investing in people and products.

Google now has 23,331 employees, an increase of about 1,500 from the end of June. Pichette suggested that Google was in the midst of a "war for talent," one that's likely to continue for the next 18 months at least. He said that success in the Internet industry depends on talent and that Google will continue to explore how it can attract and retain the best talent.

Last month, Google and five other technology companies settled a Justice Department complaint by agreeing not to engage in pacts to not hire each other's employees.

Jonathan Rosenberg, SVP of product management, said that Internet usage around the world continues to grow and that search continues to be as important as ever.

He said that Google Instant, the company's new real-time search result display system, has been well-received by users.

"It saves about two to five seconds per search and users absolutely love it," he said, adding that Google Instant will be coming to mobile devices sometime this fall.

To quell worries about which new businesses Google will be able to develop to maintain its growth, Rosenberg revealed that display advertising, meaning YouTube and DoubleClick platform ads, is generating revenue at a rate of $2.5 billion annually. He put Google's annual run-rate for mobile advertising at $1 billion. And he said that YouTube is monetizing over 2 billion views every week.

Asked whether Google might be harmed by the growth of walled ecosystems, such as Apple's iOS platform or Facebook, Schmidt dismissed the concern as "a worry-wart question." He characterized the situation as a rising tide that lifts all boats rather than a zero-sum game.

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