SAN FRANCISCO » Google is helping the economy and hurting its stock. The company is hiring so many employees for projects outside its thriving search advertising business that its expenses are growing much faster than its revenue.
The strategy came into sharper focus in Google Inc.’s first-quarter earnings report released yesterday. Higher costs spooked investors who are already nervous about a new CEO who detests Wall Street’s fixation on short-term results.
Google has committed to hiring at least 6,200 workers this year, the most in its 13-year history. It added more than 1,900 people in the first quarter, a pace that would translate to more than 7,600 for the year. Google ended March with more than 26,300 workers, 28 percent higher than a year ago.
The push coincides with Google co-founder Larry Page’s return to his original job as CEO. Page, who ended Eric Schmidt’s decade-long tenure as CEO after the first quarter ended, has indicated he plans to keep investing in opportunities that might take years to pay off.
Page, known for his aloofness, made a few tame remarks on Google’s earnings conference call yesterday. He then turned things over to Chief Financial Officer Patrick Pichette, who has been steering the presentations for the past year.
"I’m very excited about Google and our momentum, and I’m very, very optimistic about our future," Page said.
He also assured listeners that the management transition announced three months ago is unfolding as the company envisioned.
Page is overseeing day-to-day operations while Schmidt handles government relations and stalks possible acquisition targets in his new role as executive chairman.
Before taking his new role, Schmidt, 55, regularly shared his thoughts with analysts. He participated in every Google earnings conference call until a year ago.
Page, 38, evidently intends to avoid the quarterly calls. In an interview yesterday, Pichette said Page only swung by for two minutes Tuesday as a courtesy to reassure investors. "He was just being gracious and dropped in to say hi," Pichette said.
It didn’t seem to reduce the anxiety about Google’s spending and the competitive threat it faces from Facebook, whose popular website has been drawing Internet traffic and advertising away from Google.
Google shares shed $31.50, or 5.5 percent, to $547.01 in extended trading yesterday after the release of the results. At that price the stock has now fallen by about 13 percent since the announcement about the top-level changes.