SAN FRANCISCO (AP) – Google’s third-quarter earnings slipped as the Internet search leader hired nearly 3,000 more employees while pouring more money into its zest for innovation and quest for new markets.
The results announced Thursday fell below analyst estimates, causing Google’s stock to drop by $12.92, or 2.4 per cent, to $524 in extended trading. The shares had already declined by 4 per cent so far this year.
The report helps explain why Wall Street has had mixed emotions about Google Inc for years.
Powered by its dominant search engine, Google’s digital ad network consistently delivers the kind of steady financial growth that endears investors.
But Google Inc could be making even more money if not for CEO Larry Page’s belief that some short-term gains should be sacrificed so that the company can invest in projects and other research that could take years to pay off.
Page refers to these sometimes risky initiatives as “moon shots.” He defends them by pointing out that Google might not had ever developed its market-leading Android mobile software and Chrome Web browser if the company hadn’t gone out on a limb.
Some of the other innovations that Google is still trying to fine tune include Internet-connected eyewear, Internet-beaming balloons, a fleet of drones, driverless cars and robots.
To investors’ frustration, exploring new technological frontiers tends to be expensive. That’s one reason that Google’s operating expenses surged 30 per cent from a year earlier to $5 billion in the third quarter, after subtracting the costs for employee stock compensation. The pace of rising expenses outstripped the 20 per cent gain in Google’s third-quarter revenue to $16.5 billion.