Google's first quarter operating expenses and CEO Larry Page's taciturn appearance on the earnings call worried analysts covering the search engine.
Google executives reported solid earnings and a 17
percent year-over-year profit for the first quarter and painted a rosy picture
for the future of search, mobile and display advertising April 14.
That wasn't enough to satisfy financial analysts who blanched
at the company's operating expenses of $2.84 billion
, firmly $1 billion more than the search
giant reported for Q1 2010. The increased costs were partially due to the almost
2,000 new workers it hired during the quarter.
Shares of Google fell 5 percent in after-hours trading, dipped 6.85
percent in Friday morning trading, and slid 7.5 percent by 3 p.m. EST
It wasn't just about the finances. Analysts expected new
CEO Larry Page to offer guidance about the way he would run the company. What
they got for their time from Page was a vague two-minute bulletin about
how Google is going great and the new management structure he put in place is
working exactly as planned.
"I'm managing the day-to-day operations of Google as
the CEO, working very closely with my team, and I'm really excited about the
progress we've had there. I think we really hit the ground running."
Eric Jackson, founder and managing member of Ironfire
Capital LLC, wrote in a column for Forbes.com
that Page's "performance last night was abysmal and simply fed
into the worst fears investors have about what his leadership will mean for
Indeed, Page didn't say what Google was working to
address. Analysts wasted little time guessing how Google's investment strategy
will play out.
Gleacher and Co.'s Yun Kim said Google's recent efforts promoting
non-search businesses, such as Chrome and Android, and its efforts to attract smaller
and local advertisers are continuing to weigh heavily on its overall cost
"While Street EPS estimates are likely to come down
and reflect more realistic operating expenses going forward, we are somewhat
wary of the company's continued investment in non-search business, which could accelerate
under the new CEO, and also given its recent acceleration in its core search
business," Kim wrote April 15.