Web search leader Google last night reported disappointing earnings due to the costs of a recent hiring spree and a jump in other operating expenses.
Google said second-quarter net income rose to $925 million, or $2.93 a diluted share, compared with the year-ago quarter's $721.1 million, or $2.33 per share. On a sequential basis, second quarter net income dropped from the $1 billion reported in the first quarter of 2007.
Excluding one-time items and stock option expenses, Google posted a profit of $1.12 billion or $3.56 per share. That was 3 cents per share short of Wall Street targets.
Gross revenue rose 58 per cent to $3.87 billion - matching Wall Street's consensus forecast. International revenue rose to $1.84 billion, or 48 percent of revenue, up from 42 per cent of sales just a year ago.
Google failed to beat Wall Street expectations for only the second time in its 12 quarters as a publicly traded company, sending its stock down 7 per cent.
Net profit rose 28 per cent, and Google gained market share against Yahoo and other rivals in online advertising. The gains were partially offset by a rise in expenses for adding staff.
Google's workforce ballooned nearly 13 per cent between March and the end of June, growing to 13,786 full-time employees from 12,238 staff at the end of March.
Shares of Google fell to $508.50 in after-hours trade, down from a close of $548.59 in regular session trade on Nasdaq. The stock, which was trading just off of recent record levels heading into the report, had jumped 15 per cent since mid-May.