Google’s Sales Jump 27 Percent But Profits Fall Short Of Estimates

Google’s quarterly profit came in short of Wall Street’s expectations, as the company boosted its spending significantly on both marketing and employees during the first three months of the year. Its sales, however, were up a better-than-expected 27 percent.

For the quarter ended March 31, Google’s revenue was $6.54 billion, up from $5.06 billion during the same period a year ago. Earnings per share came in at $8.08, up from $6.76 during the comparable period. On average, analysts had expected sales of $6.32 billion and earnings per share of $8.11.

The details: Operating expenses at the search giant increased 54 percent to $2.84 billion, from $1.84 billion during the first quarter of 2010. Likely responsible in part for driving that increase: A jump in the number of Google (NSDQ: GOOG) employees — there are now 26,316, up from 20,621 a year ago — all of whom are making more money than they did a year ago since the company handed out 10 percent across-the-board salary increases this year.

Capital expenses were also up compared to the first quarter of 2010. Google reported capital expenditures of $890 million, up from $239 million.

The company’s sales, however, were as healthy as always. Paid clicks were up 18 percent year-over-year, while the average cost-per-click was up 8 percent. Overall, sales at Google-owned sites were up 32 percent to $5.88 billion, while sales generated through AdSense incresaed 19 percent to $2.04 billion.