The investors were spooked because of the stunning 54 percent spending surge in the first quarter of the Google Incorporation. They were already worried that the new CEO may take his eye off the bottom line to chase the revenue growth.
To many people’s amazement the shares of Google slid more than 5 percent. Hiring spree, splurging on everything from marketing to technology and company wide salary raises are the reflection of 29 percent jump in net revenue caused. Analysts expect Larry Page the co founder and new executive says it is very much necessary to keep spending on new products in order to spearhead an aggressive push into areas lie mobile business and social networking. The Google executives said that the dramatically stepped-u spending was part of the plan of the company to chase multibillion business opportunities.
Larry Page is now 38 years and he is a media adverse technology visionary who took over as CEO this month from decade long veteran Eric Schmidt. He has disappointed some people who were eager to hear his plans. Page has expressed his optimism in the future of the company. He left a trail of question that analysts directed at other executives. Jim Tierney the Chief investment officer of asset manager WP Stewart which owns the shares of Google said that he is hoping that Page enunciates the strategy much more clearly over time.
As Google battles the social networking leaser Facebook and Apple Inc Page is expected to bolster innovation and cut bureaucracy. His brief remarks on the call on Thursday did little to reassure Wall Street about the management change. Collin Gillis the BGC partner’s analyst said that they got expenses growing faster than the revenue and some people were caught by surprise by the willingness of the company to spend. Larry Page through his signals clearly said that he is going to be driving up the expenses. It is good for Larry that the expenses are targeted and results in the future will flow through the revenue streams. Google has planed to hire more than 6000 people this year. It has also planned to raise the salary by about 10 percent across the board after taking a record 2000 on board in the quarter. Patrick Pichette the chief financial officer said that the discipline of the company has not changed and the every element of the company is scrutinized and scrubbed.