Google Internet revenue rises 23 percent in third-quarter

SAN FRANCISCO (Reuters) - Google Inc beat Wall Street's revenue and profit expectations as its advertising business expanded, while losses deepened at its Motorola mobile phone business.

Shares of Google rose six percent to $941.25 in after-hours trading on Thursday.

The world's No.1 Web search engine said that its Internet business delivered net revenue, which excludes fees paid to partners, of $10.8 billion in the third quarter, up 23 percent from $8.76 billion in the year-ago period.

"They were able to grow their revenue pretty substantially, particularly in their own websites, in spite of having lower overall ad prices," said JMP Securities analyst Ronald Josey.

Google said that paid clicks increased 26 percent year-on-year during the three months ended September 30, while the average cost-per-click - the price that marketers pay Google when consumers click on their ads - decreased 8 percent.

"That's the key story, their ad volume growth is outpacing the decline cost per clicks," Josey said.

Google said it earned $2.97 billion, or $8.75 per share in the three months ended September 30, compared to $2.18 billion, or $6.53 per share, last year.

Excluding certain items, Google said it earned $10.74 per share, compared to the $10.34 that analysts were expecting, according to Thomson Reuters I/B/E/S.

Google's consolidated revenue of $14.89 billion, compared to the $14.79 billion average analyst estimate.

Operating loss at Motorola, Google's mobile phone business, totaled $248 million during the third quarter, compared to a loss of $192 million in the third quarter of 2012.

(Reporting by Alexei Oreskovic; Editing by Bernard Orr)