Google shares fall on earnings miss; CEO Larry Page speaks to analysts only for a few minutes
Google's revenue rose during the first quarter, easily beating Wall Street estimates, as the Internet search giant continued to benefit from its search advertising gusher.
But, as spending rose sharply, the company's profit missed analysts' forecasts.
Google's revenue was $6.6 billion, up from $5 billion during the same period a year ago, excluding advertising sales that Google shares with its partners. Analysts had expected $6.3 billion.
Earnings per share rose to $8.08 from $6.76 during the first quarter of 2010, missing analyst estimates of $8.10.
Google hired nearly 2,000 staffers in the first quarter for a total of 26,316 as of March 31.
Google shares dropped nearly 5% to $548.90 in after-hours trading as the earnings miss fueled anxiety that Google co-founder Larry Page, who returned as chief executive two weeks ago, will not meet Wall Street expectations as consistently as his predecessor, longtime CEO Eric Schmidt.
Investors fear Page will dramatically increase spending to invest in projects that could take a long time to make money. The stock has fallen about 9% since the surprise announcement in late January that Page would take over for Schmidt.
Investors are bound to be disappointed by the fact that Page only joined the quarterly conference call with analysts for a few minutes. He said he is "very optimistic" about Google's future. He mentioned the management changes he has made at the company, putting key Google executives in charge of seven divisions who report directly to him. He has said he plans to cut red tape and to goose innovation at the 13-year-old company.
"We hit the ground running," Page said.
-- Jessica Guynn
Photo: A Google sign is displayed as people arrive for work at the company's headquarters in Mountain View on April 4, 2011.Credit: Tony Avelar/Bloomberg