Google shares slump as costs surge

The internet giant's costs grew faster than sales in its first quarter

Google saw its shares drop on Wall Street yesterday after it announced a surge in operating costs with its first quarter results.

Although the company saw an impressive 27 per cent climb in revenue to $8.58bn (£5.24bn), compared with $6.77bn (£4.13bn) last year, it also reported a 54 per cent jump in costs for the quarter, spooking investors and pushing its shares down by 5.6 per cent to $546.01 (£333.86) in after-hours trading on Wall Street.

A significant proportion of the increased cost is a result of Google's latest hiring spree, which has seen it recruit close to 2,000 people in the first quarter.

At least a further 4,000 people are expected to be hired by the search engine company this year.

Research and development also saw a massive increase in cost, coming in at $1.23bn (£752m) for the quarter, up from $818m (£500m) in 2010.

The results come as Google undergoes a leadership change, with co-founder Larry Page taking on the role of CEO from previous head Eric Schmidt.