Google's Internet revenue grows 23% in Q1

Cost-per-click declines 4% from year ago, but is an improvement over the fourth quarter's 6% slide

Google Inc's core Internet business grew, with net revenue climbing 23% in the first quarter to a better-than-expected $9.99 billion as the company's search advertising business continued to show strength.

Shares of Google, which reached an all-time high of $844 in March, were up 2% to $783.08 in after hours trading on Thursday.

The company's average cost-per-click, a critical metric that refers to the price advertisers pay the Internet search giant, declined 4% from a year ago, the sixth consecutive quarter of declines but an improvement over the fourth quarter's 6% slide.

"Google.com seemed to be doing fine," said Macquarie analyst Ben Schachter. "Considering some of the scares around Europe, it's not nearly as bad as it could've been."

Wall Street had worried that Google's growth will slow and ad rates decline as advertising moves on to smartphones and tablets.

The company's main Internet business generated $9.99 billion in first-quarter net revenue, which excludes fees paid to partner websites, compared to $8.14 billion in the first quarter of 2012.

Seven analysts polled by Reuters had yielded an average forecast of $9.78 billion.

Overall first quarter net income, including its money-losing Motorola Mobility mobile phone business, was $3.35 billion or $9.94 per share. That compares with net income of $2.89 billion or $8.75 per share in the year-ago period, before Google acquired Motorola.

Excluding certain items, Google earned $11.58 a share, versus $10.08 a share a year earlier.

Consolidated revenue in the first quarter was $13.97 billion, versus $10.65 billion in the year-ago period.