Google reported first-quarter results after Thursday's market close that showed a 27 percent increase in revenue over the year-ago quarter and a 17 percent increase in net income.
But shares of Google (NASDAQ: GOOG) dropped more than 5 percent in extended trading Thursday as the search giant's profit of $8.08 a share fell short of consensus estimates of $8.11 a share.
Closing at 578.51 Thursday, shares fell as low as 547.23, or 5.4 percent, in after-hours trading as investors reacted to the earnings miss.
Concerns about operating expenses also may have dragged down shares as the company announced it hired 2,000 new employees in the first quarter. Google now has more than 26,000 paid staffers worldwide and predicts it will set a company record for total hires this year as it continues to pursue an aggressive growth strategy.
Google's net revenue for the quarter ended March 31 was $6.5 billion. Analysts had forecast net revenue of $6.3 billion.
Operating income in Q1 was $2.80 billion, or 33% of revenues, compared to $2.49 billion, or 37% of revenues, in the first quarter of 2010. Non-GAAP operating income in the first quarter was $3.23 billion (38% of revenues), versus $2.78 billion (41% of revenues) a year ago.
This was the first quarterly earnings announcement presided over by new Google chief executive Larry Page, who assumed his CEO duties on April 4. So while none of this happened under his official watch, the Google co-founder will have to answer questions from analysts on Thursday's earnings call.
Google announced on Jan. 20 that Page would replace Eric Schmidt in the corner office. The company made the bombshell announcement in conjunction with its fourth-quarter earnings release.