CNBC.com Google Earnings

You really can't look at the Google third quarter earnings report any other way than blockbuster. And its stock price is reflecting this far better than expected performance.

Google

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[GOOG  Loading...      ()   ] handily beat the Street, coming in at $4.92 a share versus the $4.75 expectation, on $4.04 billion in revenue, or right in line with the Wall Street consensus. Non-GAAP operating income came in at $2.02 billion, soundly beating the $1.96 billion anticipated.

But dig a little deeper and you'll see just how good a report this really is: Google's site revenue came in at $3.67 billion, right in line with the expectations; Google's network revenue at $1.68 billion, or slightly lighter than the $1.72 billion some analysts were looking for. Paid click growth showed some real strength, up 18 percent or toward the high-end of expectations; CapEx spending was way below what analysts were anticipating, at $452 million versus the $700 million to $800 million range some on the Street were looking for. And with Google hiring only 519 workers on the quarter, with the company says it is now adding employees "cautiously"—now employing a total of 20,123 worldwide—this report shows a company far more focused on expenses during the past quarter than in previous quarters. And it seems to have paid off with the company's EPS number scampering by those Wall Street analysts.

The beat is that much more significant when you consider that two analysts lowered EPS expectations just yesterday, and a third lowered expectations this morning. Those actions took the company's EPS consensus down from $4.79 to $4.75.

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Interestingly, Google, which had been trading lower for much of the day, turned higher with the rest of the market, and then saw an enormous buying spree by investors with just minutes left in the trading day. Call it a relief rally if you must, but amid so many concerns over a precipitous slowdown in online ad spending, Google seems to be in fat city. At least it was a quarter ago.

Trouble is, most of the dire economic circumstances have occurred since Google closed the books on its third quarter, and since the company doesn't offer guidance, it'll be hard to tell what the company has seen since, and what it expects next. But a comment from CEO Eric Schmidt in the company's earnings release suggests some bullishness: “While we are realistic about the poor state of the global economy, we will continue to manage Google for the long term, driving improvements to search and ads, while also investing in future growth areas such as enterprise, mobile, and display.”

And in this best of breed environment, as investors are trying to figure out where to park their money with the most stable companies with the strongest opportunities for growth, Google proves again with today's numbers that it's a worthy option. Says Colin Gillis at Canaccord Adams: "It's a nice clean quarter. In this environment, it's enough to send the stock zooming in the after-hours. It's the power of the model—paid search is the best form of media advertising out there. Even in a down market, advertisers are going to be seeking customers. These results separate out Google from the eBays and the Yahoos in the space."

Couple that with Google saying it's seeing "strong traffic and revenue" growth across all sectors and geographies, and indeed these shares have reason to be off to the races.

By the way, Yahoo

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[YHOO  Loading...      ()   ]reports earnings Tuesday; Microsoft

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[MSFT  Loading...      ()   ]reports a week from today.

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