Google profit soars, yet stock falls

SAN FRANCISCO - Google Inc. is thriving again, and feeling so good about the economy that it's spooking investors.

The company's first-quarter earnings exceeded analyst estimates and its revenue growth accelerated for the third consecutive quarter. More people clicked on Internet ads powered by its dominant search engine.

But the results released Thursday didn't impress investors, who appeared worried that the strengthening economy may cause Google to abandon some of the financial discipline that it exerted during the recession. The company's shares tumbled almost 5 percent in extended trading.

Investors also might have been unnerved to see a decline from the previous quarter in the prices paid for Google's ads. The average first-quarter price fell 4 percent from the fourth quarter. But it was 7 percent above the average rate at the same time last year.

The architect of Google's cost-cutting, Chief Financial Officer Patrick Pichette, left little doubt the company is loosening its purse strings again.

"We are continuing to invest heavily in people, products and acquisitions," Pichette told analysts in a Thursday conference call.

Google shares shed $29.30 in extended trading after closing at $595.30, up 1.1 percent, in the regular session.

Revenue climbed 23 percent to $6.78 billion. That marked Google's greatest revenue growth since the third quarter of 2008.

The most noticeable change in Google's spending patterns cropped up in the company's payroll.

Google added nearly 800 workers during the quarter, part of an effort to hire about 2,000 employees this year. That's the most hiring Google has done since the first quarter of 2008.