Google back on track for growth, eyes deals

By Alexei Oreskovic

SAN FRANCISCO (Reuters) - Google Inc's growth machine is back in gear. The world's No. 1 search engine not only posted higher-than-expected third-quarter profits and revenues, but also said it was looking for major acquisitions and could buy a large company "maybe every year or two."

"We're open for business in making strategic acquisitions, both large and small," Google CEO Eric Schmidt told analysts on a conference call.

Google executives said large advertisers were more eager to spend on search ads in the third quarter and consumers shopped more online, helping the Internet company notch its strongest quarter-on-quarter revenue growth since 2007's final quarter, underscoring improving economic conditions.

Shares of Google, which have surged more than 80 percent since mid-March, rose 3.2 percent to $547.00 following the earnings report, after closing down 1 percent at $529.91 on Nasdaq on Thursday.

"It's a reflection of the fact that there's a lot more economic activity going on the Internet," said Sanford Bernstein analyst Jeff Lindsay.

Google was widely expected to be one of the biggest, early beneficiaries of an economic recovery, thanks to its dominance of the online search market, whose growth has slowed as recession-hit companies cut back on advertising spending.

It said both the amount of money that advertisers pay for the text ads that appear alongside search results as well as the number of clicks on those ads by Web surfers increased quarter-over-quarter.

Google also made headway in some of its other business initiatives, although they have yet to pay off the way its search advertising business has.