Online search giant Google (Nasdaq: GOOG) reported earnings last week that showed sharp improvements over the fourth quarter from the previous year. Driven by robust advertising growth, the company's business is accelerating again. Although the earnings were impressive, the Street was looking for more, so Google stock initially went lower. Despite all the byplay with Google's China problems, its founders' plan to sell a large block of shares and the Street's reaction to Google, this shouldn't obscure the positive results.

IN PICTURES: 10 Biggest Losers In Finance

Google's Numbers
Google reported $6.13 a share net income or a total of $1.97 billion, compared to $1.21 a share or $382 million in last year's fourth quarter. Revenue was $6.67 billion compared to $5.7 billion in the same quarter last year. Last year included a $1.1 billion charge for the declining value of some Google investments. While the analyst estimates were for $6.43 a share, Google's compensation adjusted earnings were $6.79 per share, so the failure to beat the $6.43 per share estimate was regarding the actual net income rather than the adjusted earnings figures. Regardless, the revenue exceeded estimates of $4.87 billion, so the most reasonable way to look at the report is that with revenue and earnings up strongly in an industry which is still facing possible declines, Google is still the potent online search and advertising king.

Competitors In Many Areas
Google faces wide competition of varying strength on many fronts. With so many areas of internet-based business, in addition to search, mobile apps, video and many more segments in play, not the least of which is of course advertising, there is partial overlap or more with many companies. Even prior to the dust-up in China, Google was not positioned to eclipse Chinese search engine Baidu (Nasdaq: BIDU) within China any time soon. Although it's clear that Baidu has parlayed a platform of already developed technologies rather than innovations into its strong position in China, Baidu may not be able to continue doing that indefinitely, whether Google remains in China or not.

Large internet company Yahoo's (Nasdaq: YHOO) best feature is its content, and while many have dismissed Yahoo as old news, it is hardly innovating anymore - one fund manager likes it as an undervalued stock with the opportunity to benefit from cost cutting.

IAC/InterActive Corp (Nasdaq: IACI), parent of and a portfolio of internet sites, is one of the companies that's expected to report lower year-over-year earnings, putting a truer light on Google's quarterly performance.

Then there's AOL (NYSE: AOL), the finally spun-off ill-suited former partner of relieved Time Warner (NYSE: TWX). AOL is a shell of what it once was, and although it still has content and delivery as an ancient dial up internet provider, it didn't exactly get off with a bang as a stand alone when it announced layoffs less than a month after beginning its new life. It's hard to see AOL as a threat to anyone.

Google's Advantage
While there are other more formidable competitors to Google, the company continues to dominate the online advertising and search world. Whether branching out with its Android app or Nexus phone will be its next big thing, the core of its search and ad business is most important. Google looks like it will have a strong year when many industries won't. Yes, the stock is still trading at steep levels, at around 26-times earnings, but one reason the Street reacted with disappointment to strong earnings is because expectations for this company remain sky high. It's a bellwether stock, really a king, so it's priced at what looks like a king's ransom. (For more information about investing in technology companies, read Technology Sector Funds.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!