April 15, 2011- Internet giant Google’s stock suffered on Friday after the search company announced that their first quarter 2011 earnings were lower than expected. The stock was off nearly 7%. In early trading Google shares were down almost $40 to $539 dropping below the $550 mark for the first time since October of 2010.
The web giants reported an adjusted profit of $8.08 per share that was $0.03 short of the anticipated $8.11. Their earnings increased 17% over the same period in 2010 and overall revenue was higher than what was forecasted by analysts because of the continued demand for their online advertising.
Higher spending due to recent hiring and other investments helped to hurt the bottom line. They hired close to 2,000 employees during the first quarter which was the highest amount since 2008’s first quarter. Operating expenses for the quarter rose to 33% of revenue in comparison to only 27% a year ago.
The stock, by some, has been downgraded to a hold rating, with investors and analysts saying show me what you can do now. The California based Google reported its net income rose to $2.3 billion in the first quarter an increase of $0.98 a share over the same period last year. Net revenue rose to $6.5 billion for the first quarter ending March 31.