Google tops profit target

By Eric Auchard

SAN FRANCISCO (Reuters) - Internet leader Google Inc (GOOG.O) said on Thursday it saw no impact from a weakening U.S. economy as it posted a better-than-expected quarterly profit and waved off fears of an online advertising slump.

Google's hard-hit shares surged 18 percent above $500 -- a level last seen in February -- as the company showed signs of better cost control and earned more revenue abroad than at home for the first time, partly because of the weak dollar.

"It's clear to us that we're well positioned for 2008 and beyond, regardless of the business environment that we find ourselves surrounded by," Chairman and Chief Executive Eric Schmidt told investors on a conference call.

Google, one of the hottest technology stocks of 2007, had seen its shares erase last year's 50 percent gain since the start of 2008 on investor concerns that the online ad industry was maturing and vulnerable to a U.S. economic downturn.

"It's a good time to be a Google bull," said Colin Gillis, an analyst with Canaccord Adams. "The boys delivered."

But Cowen & Co analyst Jim Friedland said the surge in the shares was not based on dramatic improvements in Google's growth outlook, simply on relief that the economy was not dragging down the company's results as had been feared.

"It was sort of an uneventful quarter other than taking a major concern -- the economy -- off the table," he said.

First-quarter net income rose to $1.31 billion, or $4.12 per diluted share, from $1 billion, or $3.18 per share, a year earlier. Excluding one-time items and stock option expenses, profit was $4.84 per share, comfortably ahead of the average Wall Street forecast of $4.53 on Reuters Estimates.