Google's profit up 17% but misses Street's expectations
By David Goldman, staff writer April 14, 2011: 4:45 PM ET
NEW YORK (CNNMoney) -- Google Inc. reported a quarterly profit on Thursday that rose from year-ago results but missed Wall Street's forecasts.
The world's online search leader said its net income in the first quarter rose to $2.3 billion, or $7.04 per share, up 17% from a year earlier.
Results included one-time charges totaling $1.04 per share. Without the charges, Google said it earned $8.08 per share. Analysts polled by Thomson Reuters, who typically exclude one-time items from their estimates, had forecast earnings of $8.10 per share.
Profit rose as both the number of clicks on Google's ads and the amount that advertising partners pay per click increased by a healthy margin: Paid clicks rose 18% and cost per click grew 8% over last year.
Sales for the Mountain View, Calif., company rose 27% to $8.6 billion. Excluding advertising sales that Google shares with partners, a figure also known as traffic acquisition costs, the company reported revenue of $6.6 billion, which topped analysts' forecasts of $6.3 billion.
Shares of Google (GOOG, Fortune 500) dropped 5% after hours.
Google launched a hiring and spending spree in the first quarter, upping its headcount by 8% and investing nearly $900 million in new infrastructure. Google also realized the cost of a 10% company-wide salary increase. The company said it expects to continue to make "significant" capital expenditures going forward.
That's part of new CEO Larry Page's promise to devote more resources to the company's key product areas. As a result, the Page said the company would embark on the biggest hiring surge in Google's history.
Page, who took the company's reins on April 4, appeared only briefly on a conference call with analysts Thursday afternoon.
"There is tremendous improvement to be had in our core products," he said. "We are very optimistic about our future."
The new CEO made structural changes to the company and shuffled its top management, including promoting six product heads to executive vice president, two of which were on the call Thursday.
"We're in very good hands with our team," Page said.
Credit: CNN (www.cnn.com)
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