Google’s strong first quarter provides latest evidence of a rebounding Internet ad market

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Google 1Q profit rises 37 pct to top analyst views

SAN FRANCISCO — Google Inc.’s first-quarter profit rose 37 percent as more people clicked on higher-priced Internet ads powered by the company’s search engine, but investors possibly worried about Google’s rising expenditures sent its stock down sharply.

Google shares fell $31.30, 5.3 percent, to $564 in after-hours trading. Before the earnings release they closed at $595.30, up 1.1 percent on the day.

Even so, the results released Thursday are the latest indication that the online advertising and technology sectors are bouncing back from the recession more quickly than many other parts of the economy.

Google earned nearly $2 billion, or $6.06 per share in the quarter. Revenue climbed 23 percent to $6.78 billion. That marked Google’s greatest revenue growth since the third quarter of 2008.

If not for expenses covering employee stock compensation, Google said it would have earned $6.76 per share. That figure exceeded the average estimate of $6.60 per share among analysts surveyed by Thomson Reuters.

After subtracting commissions paid to advertising partners, Google’s revenue stood at $5.06 billion. That was about $90 million above analyst estimates.

The strong performance evidently wasn’t enough to satisfy investors hoping for a better showing. Google added nearly 800 employees in the first quarter to end March with 20,621 workers. The increase in payroll, coupled with a pledge by management to spend heavily in developing new products, may have raised worries about rising expenses trimming profit margins later this year.