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Business

Higher Google profits usher in Alphabet era

Shares in Google's new parent company, Alphabet, have soared on better-than-expected Q3 earnings as the search engine giant found ways to extract more money from mobile advertisements and boost traffic on YouTube.

The

numbers released on Thursday

, which reflected Google's performance prior to its being bundled up with other ventures under the new Alphabet banner, showed profits jumping 45 percent to nearly $4 billion (3.6 billion euros) from $2.7 billion one year ago.

Profits and revenue were well above analysts' expectations, sending shares in the new holding company - still traded under the old GOOG tag - up 10 percent in after-hours trading.

The positive results highlighted Google's successful management of the

shift from desktop computers to mobile devices

, where ads appear smaller and glean less money from companies trying to boost their products' visibility.

'Cost per click'

Advertising revenue is the company's largest source of income. Even though the average price of online ads has been declining for four straight years, the number of paid clicks - where advertisers only pay if a user clicks on an ad - rose 23 percent from July to September.

"Search traffic on mobile phones has now surpassed desktop traffic worldwide," said Sundar Pichai, who was named chief executive of Google after long-standing CEO Larry Page announced

the formation of Alphabet

.

One reason Google has been able to navigate the desktop-to-mobile transition is because it had the foresight years ago to create Android, its mobile operating system that features primary Google products like Gmail, Maps, Search and YouTube.

G is for Google

So far, Google has never been able to gauge how well its core operations had performed because the company has had billion-dollar "moon shot" investments on its books. Those investments are some of the riskiest but can also be the most rewarding, as they have included novel innovations like self-driving cars and self-regulating thermostats.

But in January, Alphabet will report financial results for Google that are divorced from these other businesses. Google's subsidiaries include Google Maps, YouTube, the Chrome browser and operating system, and Android mobile phones.

Companies that fall under the Alphabet umbrella include its secretive research arm, Google X, connected home products maker Nest, health-oriented subsidiaries Calico and Life Sciences, as well as Google Ventures, which provides venture capital for startups, and Google Capital, which invests in larger tech companies.

cjc/uhe (AP, Reuters, dpa)

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