Google executives were enthusiastic in their first-quarter conference call yesterday, highlighting Google’s 27 percent year-over-year increase in revenues, but higher expenses brought down profit and its shares fell more than 5 percent in after-hours trading, to $547.98.
Google reported revenues of $8.58 billion for the quarter ended March 31. GAAP net income for the quarter was $2.30 billion compared with $1.96 billion in the first quarter of 2010. Operating expenses were $2.84 billion in the first quarter compared with $1.84 billion in the first quarter of 2010.
The Googlers on the call made it clear they expect to continue to make significant capital expenditures. But when asked during the Q&A about acquisitions, CFO Patrick Pichette said that any big acquisition has to pass a very high bar, including the mandate that it not be a distraction to its core business. The words “Facebook” and “Twitter” were not mentioned, but those are two that observers often mention as likely targets, whether in the past or future tense.
CEO Larry Page made a brief appearance at the start of the call, saying the steps outlined during the last conference call have come to fruition as planned. He also referred to some other management changes since he took over the position left vacant by Eric Schmidt, who continues to be the external, public-facing voice of the company. “I’m very optimistic about our future,” he said.
Susan Wojcicki, Google’s senior vice president, Advertising, said many advertisers are running mobile-only campaigns now, enabling them to move to more custom mobile experiences and use location as part of their ads. Click-to-call also is taking off.
Jeff Huber, senior vice president, Commerce & Local, said Google is seeing a lot of growth in the tablet segment and in terms of its user dynamics, it’s a hybrid between mobile and the desktop. Motorola’s Xoom was the first Honeycomb product to be released, but a lot more are coming, and Google has introduced a feature to enable advertisers to specifically target tablets.
In terms of quantifying the mobile user, that’s not something Huber said he could comment on specifically but that said, if you look at the kind of investments Google is making, it’s clear there’s great potential there. Wojcicki said it’s still very early in terms of what mobile ads can do, but mobile is bringing new ways to interact with merchants and advertisers.
Google added about 1,900 employees in the quarter, ending with 26,316 full-time employees worldwide at the end of March.
Several times on the call, executives expressed thanks to Jonathan Rosenberg, chief of product development, who is leaving the company. The Mercury News reported in early April that Rosenberg decided to step down after Page took over as CEO because he couldn’t make a long-term commitment to stay at Google.