By John Letzing and Greg Morcroft
Shares of Internet search firm Google Inc. (GOOG) fell nearly 7% Friday to a six-month low after the Web search giant reported lower-than-expected earnings for the first quarter.
In early trading, shares of Google were down $39.51 to $539. It was the first time for the stock to drop below the $550 mark since mid-October when the stock got a boost from better-than-expected results for the third quarter of 2010.
Late Thursday, Google reported an adjusted profit of $8.08 a share, which missed the projection of $8.11 a share from a FactSet Research survey of analysts. Earnings rose 17% from the same period last year--and revenue beat analysts' forecasts--thanks to improving demand for the company's online advertising.
But heavy spending on new hires and other investments crimped the bottom line. Google added more than 1,900 employees to its headcount during the quarter, which made for the highest rate of new hires since the first quarter of 2008. Operating expenses rose to 33% of revenue for the quarter compared to 27% of revenues for the same period last year.
"We believe Google is likely to be range-bound for the foreseeable future," wrote Mark Mahaney of Citigroup, who downgraded the stock to a hold rating on Friday, saying the stock is now a "show-me story."
Mountain View, Calif.-based Google said its first-quarter net income rose to $2.3 billion, or $7.04 a share, from $1.96 billion, or $6.06 a share, in the same period a year earlier. Net revenue for the period ended March 31 rose to $6.5 billion, Google said. Excluding one-time items, earnings for the period were $8.08 a share.
Analysts polled by FactSet Research had expected first-quarter earnings excluding items of $8.11 a share and $6.3 billion in net revenue.
-By John Letzing and Greg Morcroft; 415-439-6400; AskNewswires@dowjones.com
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment