Google bullish despite Q1 target miss
Search engine giant defends decision to invest in staff, claiming it will keep it ahead of the curve
Google’s intensive hiring policy and generous staff pay reviews have pushed its operating costs up above 50 per cent for its most recent financials.
The company missed its market estimates causing its share price to take a slight hit, but it reported strong revenues of $8.5bn for the quarter ending 31 March 2011, a 27 per cent increase compared with Q1 2010.
Operating profit was $2.8bn, equating to 33 per cent of revenues, compared with $2.4bn and 37 per cent of revenues in Q1 2010.
UK revenue totaled $969m, representing 11 per cent of revenues in the first quarter of 2011; this stood at 13 per cent in the first quarter of 2010. The decrease was attributed to the UK’s slower recovery from the global downturn.
Operating costs shot up by $1bn to $2.84bn, compared with $1.84bn in 2010. This was mainly caused by the company’s hiring spree that saw it take on almost 2000 staff in the first three months of the year, and its 10 per cent pay award to staff.
Larry Page, chief executive of Google, said in an earnings call: "We have had a tremendous quarter and it shows the strength of our business and the continuing growth in the tech industry."
Speaking of the recent management changes, Page said everything was "working very well".
"I think we really hit the ground running, and I am tremendously excited about all of the things that lie before us as a company," he added.
Patrick Pichette, chief financial officer at Google, added: "Our revenue growth clearly shows the wisdom of [our] decisions to fuel our growth ahead of the curve. We are building billion-dollar businesses, and we are confident that now is the time to invest.
"It is with this optimism that we will continue to do so aggressively, but with discipline and a strong focus on fuelling the winning products. From an expense point of view, we are taking some bold steps but always with good strategic rationale and discipline in mind."