Google Eat 'Dutch Sandwich' Topped With $2.3 BILLION Profit

Written by Oonagh Reidy     14/10/2011 | 06:06 | Category: INDUSTRY

$10 billion revenues, rising profits and headcount.. what recession?! Google announced stellar financial results to September 30, yesterday.

Google reported revenues of US$9.72 billion for the quarter ended September 30, or Q3, an increase of 33% compared to Q3 2010.

Profits for the quarter at the search giant also rose to a phenomenal  $2.73 billion and topped estimates by Wall Street analysts.

Net income also surged 26% to $2.73bn - a jump from from $2.17bn compared to the same period a year ago.

Google-owned sites generated revenues of $6.74bn, or 69% of total revenues, a 39% increase over last year, while 'partner sites' generated revenues, of $2.6 bn, or 27% of total, through AdSense programs.

However, traffic acquisition costs (TAC) the portion of revenues shared with Google's partners, rose to $2.21bn and the Internet powerhouse indicted it intends keeping capital spending up meaning more mergers and acqusitions are on the way.

"We had a great quarter," said Larry Page, CEO of Google. 

"Revenue was up 33% year on year and our quarterly revenue was just short of $10 billion. Google+ is now open to everyone and we just passed the 40 million user mark. People are flocking into Google+ at an incredible rate and we are just getting started!"

Headcount also rose - 31,353 full-time employees - up from 28,768 in June.

Revenues from outside of the US totalled $5.3 bn, or 55% of the total figure, an increase of 1% compared to the previous quarter and 3% gain on the same period in 2010. Revenues from the United Kingdom totaled $1.05 billion, or 11% of total.

However, it is not all roses for Page, with the US Internal Revenue Service (IRS) said to be conducting a major investigation into how Google are channelling profits through international subsidiaries, in particular Holland and Ireland, according to Bloomberg. 

These accounting practices known as ''Dutch sandwich" and 'Double Irish" are regular practices for US companies to avioud paying corporation tax.

Google Ireland, as a European HQ, is a major employer in the country and currently recruiting staff at its Dublin subsidary and has just a 12.5% tax rate, compared to Australia's 30%.

Read Cheers Ireland: Why Google Oz Send Revenue To Greener Pastures

This has affected Google Australia operations, which claimed a $3 million loss at year ending December 31 last, despite pulling in revenues of approximately $741m, funnelling the money through Irish subsidiary.

The IRS is also said to be looking at its $1.65bn YouTube acquisition.