Coming off a stellar first quarter, Google Inc. seems to have regained the momentum that it lost shortly after the U.S. recession started in December 2007.
But it looks like it’s going to take a lot longer for the Internet search leader’s stock price to rebound to its pre-recession levels.
The shares fell $29.11, or 4.9 percent, to $566.19 in morning trading Friday, a day after the company released first-quarter results that exceeded analyst expectations.
Earnings rose 37 percent and revenue surged 23 percent. The latter figure represented Google’s highest growth rate since the summer of 2008.
Google rattled investors, though, by adding nearly 800 workers in the quarter, the most in two years, and vowing to spend heavily to hire even more employees, snap up smaller companies and develop more products beyond the Internet search advertising market that generates most of the company’s profits.
The loosening pursestrings could crimp earnings growth. The increased spending also raised worries that Google might be abandoning some of the financial discipline that it exerted in late 2008 and last year as the recession deepened.
Patrick Pichette, Google’s chief financial officer and the driving force behind the cost cutting, said the company remains “generous but frugal.” He scoffed at the notion that Google would become a spendthrift now that it’s thriving again.
“Hiring more people does not mean we are wasteful,” he said in a Thursday interview. “It just means we have a great agenda.”
Another possible concern: The average price paid for Google ads in the first quarter was 4 percent lower than the fourth quarter, traditionally a period of heavy demand because of the holiday shopping season. The average price was 7 percent higher than a year ago.
The sequential slowdown fed the theory that Google may be facing more pricing pressure as both Microsoft Corp.’s Bing search engine and Facebook’s…