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Google's income nearly tripled over the Christmas holiday period, boosted by growing online advertising, but failed to excite investors.

The advertising giant reported a 176 per cent increase in net income for the three months to December 31 to $1.03bn on revenue that jumped 67 per cent to $3.2bn. Earnings per diluted share increased $2.07 to hit $3.29.

Annual net revenue doubled to 110 per cent to $3.07bn on revenue of $10.6bn, an increase of 72 per cent, and EPS that nearly doubled to $7.05.

Money from Google sites increased 80 per cent to $1.98bn in the quarter, accounting for 62 per cent of the pie. Revenue from partners' sites, affiliated through the AdSense engine, grew 50 per cent and accounted for 37 per cent of Google's business.

Traffic acquisition costs (TAC) increased 40 per cent to $976m, but continued its downward march as a proportion of Google's ads business thanks to the health of the overall business. TAC was down almost three percentage points to 30.7 per cent.

So it was a little puzzling that Google was down in after hours trading. Shares in the giant fell by as much as $15, or three per cent, despite Google pretty much hitting expectations.

Either Wall Street is tiring of Google's good fortune and its wanton commitment to keep ploughing juicy revenue back into the business or is getting a little frustrated at a lack of answers over how the $1.65bn YouTube acquisition will translate into search-driven ad revenue and growth.

Chief financial officer George Reyes told investors to expect "significant" investment in Google's technology infrastructure, advertising partnership and internet services, and continued expansion in staffing. Investment will ramp up as Google pushes into video, radio and brand advertising, co-founder and president Sergey Brin said.

On YouTube, executives promised integration with Google search "overtime" but would not be drawn on specifics or break out revenue. The company, meanwhile, said mobile search traffic would increase substantially during 2007. ®

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