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Google Operating Costs up Nearly 55%

Google's latest quarterly results have shown rising costs from recruiting new staff.

Although revenues for the first quarter of 2011 rose 27 per cent year on year to $8.58bn (£5.24bn), operating costs were up nearly 55 per cent to $2.84bn. This rise was mainly owing to Google's 10 per cent pay award to staff and a hiring spree that saw nearly 2,000 new staff in the first three months of the year.

"We've had a tremendous quarter. It shows the strengths of our business and the tremendous improvements to be had. I'm managing day-to-day operations and am really excited about progress. I'm hitting the ground running," said chief executive Larry Page in the earnings call.

Page praised former chief executive Eric Schmidt, who is still working on government issues for the company, and Jon Rosenberg, who usually takes Google's earnings calls but who has now left the company.

"These results demonstrate the value of search and search ads to our users and customers, as well as the extraordinary potential of areas such as display and mobile," said Patrick Pichette, chief financial officer at Google.

"It's clear that our past investments have been crucial to our success today, which is why we continue to invest for the long term."

The financial markets reacted badly to the earnings results, however, and Google's stock had lost over five per cent of its value by the end of the day's trading.

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