By Sam Diaz
Washington Post Staff Writer
Friday, April 20, 2007

Google continued to outpace its Internet rivals during the first quarter, reporting yesterday that profit grew to $1 billion, up 69 percent from the comparable quarter last year. The company also outlined plans to expand further through new advertising projects in online and traditional media.

Its quarterly results were in stark contrast to those of rival Yahoo, which disappointed Wall Street this week.

"We are ecstatic about our financial results for this past quarter," chief executive Eric Schmidt said during a conference call yesterday.

Schmidt said the company's core businesses -- search and advertising -- have provided the financial stability to experiment in nontraditional areas. "It allows us to take calculated risks," he said.

This month, the company announced a radio advertising deal with Clear Channel Communications, a PowerPoint-like product to challenge Microsoft, partnerships with content providers for Google-owned YouTube and the all-cash acquisition of DoubleClick, a leading Internet display-advertising company.

Google also said yesterday that tests have been going well with its partnership to deliver advertising to newspapers, including The Washington Post.

But branching into new areas has also raised the company's exposure to legal and regulatory scrutiny.

In coming months, Google will probably have to address antitrust and privacy concerns that are being raised related to the $3.1 billion DoubleClick purchase.

It also faces a copyright-infringement lawsuit by media giant Viacom, which alleges that YouTube infringed on its copyrighted videos.

Google said it is working on a new product called Claim Your Content that would automate the removal of unauthorized, copyright-protected videos on YouTube while permitting copyright holders, such as TV studios, to post their clips online. It expects to release the product later this year.

Financial analysts, impressed with the company's back-to-back strong quarters, said the legal and regulatory issues would not slow the company's growth in the short-term, especially in advertising.

"On the ad front, they're the biggest game in town," said Derek Brown, an analyst with Cantor Fitzgerald in San Francisco.

"I am basically convinced that no company in history has put up the type of financial performance that Google has put up from a growth and financial perspective for as long as they've done it," he said.

Google's first-quarter revenue rose 63 percent to $3.66 billion.

Shares of Google fell $4.36 yesterday, to close at $471.65 . They rose to $486.80 in after-hours trading.