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Google Shares Rise on Stellar Profit

Shares of Google Inc. (GOOG) jumped almost 10 percent at one point Friday after the Web search market leader's quarterly results, released Thursday, blew away Wall Street's expectations.

Google late on Thursday reported its first-quarter revenue nearly doubled to $1.26 billion — a level that now surpasses that of some traditional media outlets. By comparison, Clear Channel Communications Inc. (CCU), the No. 1 U.S. radio station owner, in its most recently reported quarter had radio revenue of $964.5 million.

Google's shares rose almost 10 percent to $224 at the start of trade on the Nasdaq on Friday, topping the record high of $216.80 reached in February. By the close of trade, however, shares had retreated to $215.81, up $11.59 or almost 6 percent.

Piper Jaffray analyst Safa Rashtchy raised her price target on the stock to $275, up from a prior target of $250.

"Once again Google produced impressive results, generating the biggest upside of the quarter so far and showing that it is still growing much faster than the rest," Rashtchy said in a research note to clients.

"What is impressive for us is that Google is already planning the growth for 2007, with an array of new products its engineers are working on," Rashtchy wrote.

Another analyst, Lauren Rich Fine of Merrill Lynch, called Google's quarterly results "jaw-dropping" but said that given the stock's "likely strong positive reaction to the news, we have trouble stepping up to the plate as expectations keep getting heightened."

Google net income rose to $369.2 million, or $1.29 a share, in the first quarter, from $64.0 million, or 24 cents a share, a year earlier. Results from the most recent quarter included a $49 million charge related to stock-based compensation. Total revenue rose to $1.26 billion from $651.6 million.

Wall Street analysts on average had expected net profit of 78 cents a share, and excluding some items the average target had been 92 cents, according to Reuters Estimates. Revenue had been seen at $1.16 billion.

Virtually all the company's revenue comes from ads that are triggered when Web users type certain key words into Google's search engine.

Google said income from operations rose to $443 million from $155 million, and its operating profit margin rose to 35.2 percent of revenue from 23.8 percent a year earlier.

"This improvement in operating margins was primarily due to decreases in both stock-based compensation expense and TAC (traffic acquisition costs (search)) as a percentage of revenue," Google said.

"It looks like growth in the company's traditional business continues to drive growth and profits at the company — and that leads to higher operating margins and more money on the bottom line," said Barry Randall, manager of the First American Technology Fund.

Reuters and the Associated Press contributed to this report.