Oct. 22 (Bloomberg) -- Shares of Google Inc., the world's most-used Internet search engine, gained as much as 8.9 percent in Europe after the company said third-quarter profit and sales more than doubled.

The stock rose as much $13.31 to $162.69 from yesterday's $149.38 close on the Nasdaq Stock Market and traded at $161.44 as of 9:57 a.m. in Frankfurt. Before today, Google shares had risen 76 percent from the company's Aug. 18 initial public offering.

Google Chief Executive Eric Schmidt said yesterday that growth in the market for advertising next to Web search results shows no signs of slowing. The Mountain View, California-based company may be taking a larger share of that market from Yahoo! Inc., owner of the second-most-used search engine, said Marianne Wolk, an analyst at Susquehanna Financial Group in New York.

``The results were very impressive for Google,'' Mark Mahaney, an analyst at American Technology Research in San Francisco, said yesterday. ``It's hard to find any hole in what they just delivered.'' He rates Google shares ``sell.''

Net income rose to $52 million, or 19 cents a share, from $20.4 million, or 8 cents, a year earlier, Google said yesterday in a statement after the close of regular U.S. trading. Profit was reduced by a $201 million non-cash expense to settle a legal dispute with Yahoo.

Revenue more than doubled to $805.9 million from $393.9 million. Revenue excluding ``traffic acquisition costs,'' fees that Google pays to other Web sites that display ads it sells, was $503 million. That was more than the average estimate of $456.3 million from 17 analysts surveyed by Thomson Financial.

Search Advertising Market

Google sells about half of the so-called sponsored search advertising in the U.S., David Hallerman, senior analyst at research firm eMarketer Inc. has said. That market will grow 55 percent to $3.93 billion this year, New York-based eMarketer has forecast.

``There's much more demand than the current market players, including Google, can supply,'' Google Chief Executive Schmidt said yesterday in an interview. ``The limitations on our growth have pretty much been internal. It's really a function of how quickly we can bring out new innovations.''

Google has introduced new products this year including an e- mail service called GMail and software for searching computer files. The company's new products are free and designed to bring more traffic to its Web sites, delivering a larger audience for advertisers.

Developing New Products

Schmidt, 49, said Google plans to continue investing in developing new products. Its Web site won't become a so-called portal like Yahoo or Microsoft Corp.'s MSN, with links to dozens of services from their home pages, he said. Google's home page is dominated by its search engine, and other services that the company offers often aren't promoted there.

``We do not have a portal approach,'' he said yesterday on a conference call with analysts. Instead, the company will try to develop individual services and later look for ways to integrate them.

Google's Web sites were used for about 36 percent of Internet searches in the U.S. in August, according to research firm ComScore Networks. Along with the main Google search engine, those include the Froogle online shopping service and other Web sites the company owns. Yahoo's Web sites were used for 31 percent of searches and Microsoft Corp.'s MSN sites were used for 14 percent.

Yahoo

Yahoo, based in Sunnyvale, California, began offering its own search engine in February. Yahoo's home page previously had provided Google's search engine, and Yahoo was an early investor in Google.

Yahoo spokeswoman Joanna Stevens declined to comment on the company's share of the search advertising market compared with Google's.

Google paid last quarter to settle a dispute over how many shares Yahoo was owed under terms of a warrant it held to buy Google stock. Under the settlement, Yahoo's Overture Services unit dropped a patent infringement suit against Google. Overture competes with Google to provide sponsored search ads.

Google, its 31-year-old co-founders Sergey Brin and Larry Page and some other executives raised $1.92 billion in the company's IPO. They used an Internet-based auction to help set their $85 initial price and to distribute the stock

They issued 22.6 million shares, an 8.3 percent stake in the company. The number of Google shares on the market could more than double on Nov. 16 when some employees and other insiders are freed from so-called lock-up restrictions that currently bar them from selling stock.

That and Microsoft's plans to introduce its own search engine could cause Google shares to fall, American Technology's Mahaney said.

To contact the reporter on this story: Adam Steinhauer in San Francisco at asteinhauer@bloomberg.net.

Last Updated: October 22, 2004 04:00 EDT