LawFont.com

In the third quarter of the 2005 financial year (July-September), Google earned US$381 million (US$1.32 per share). (At the close of business on 21 October, Google was selling at over US$339 a share—that’s a record high.) That’s seven times more than Google’s earnings of US$52 million (19 cents a share), during the same period in 2004, although last year’s results reflected the cost of settling a patent dispute with Yahoo.

According to Google, this growth was the result of Google’s increased profit from Internet searches, including search advertising. Part of Google’s strategy is to sell advertising through an auction process, in which advertisers bid what they would be willing to pay if a user clicks on their ad. This strategy strikes me as a clever way of maximizing advertising profits, although it’s not unique. It seems to have been inspired not only by traditional auction websites like eBay, but “buyer-driven commerce” approaches, popularized by Priceline.com (remember them?).