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Rise in costs rattles Google

Feeling the pressure

Google’s first set of results since co-founder Larry Page returned has added pressure on its shares after a rise in costs.

First quarter figures heightened Wall Street fears that Google’s earnings might be affected due to its decision to hire 6,200 workers this year – it will be the biggest workforce since Google began. Mr Page replaced Eric Schmidt as chief executive earlier in April and intends to invest in long-term opportunities.

Google now employs over 26,300 workers, with more than half of new staff working on ways to supplement the search advertising network. New ventures include video ads on Google’s YouTube site, increased banner advertising and ads on smartphones.

Against the odds

Operating expenses were $2.84 billion (£1.75 billion), equivalent to 33 per cent of revenues and compared with $1.84 billion a year earlier, when 27 per cent of its revenues were taken up by operating costs.

The company reported revenues of $8.6 billion for the quarter, an increase of 27 per cent on a year earlier after paid-for clicks, relating to ads served on Google sites. UK revenues totalled £595 million, equivalent to 11 per cent of all sales in the quarter, down from 13 per cent in the first quarter last year.

Meanwhile, figures released last week showed that Google stuck its ground in the market this quarter despite some fierce competition from Microsoft’s Bing search engine.

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