SAN FRANCISCO — Google’s first-quarter earnings growth faltered as the Internet company dealt with a persistent downturn in advertising prices while spending more money to hire employees and invest in daring ideas.
The results announced Wednesday fell below analyst projections. Google’s stock shed more than 5 percent, or $30.94, to hit $525.50 in extended trading after the results were released.
Although it remains among the world’s most profitable companies, Google Inc. is struggling to adjust to a shift away from desktop and laptop computers to smartphones and tablets. The upheaval is lowering Google’s ad rates because marketers aren’t as willing to pay as much to pitch consumers who are squinting at the smaller screens on mobile devices.
Google’s average rates for ads appearing alongside its search results fell 9 percent from last year. It marked the 10th consecutive quarter that the company’s “cost-per-click” has declined from the previous year.
The numbers for the opening three months of the year include Google’s troubled Motorola Mobility cellphone subsidiary, which the company is in the process of selling to Lenovo Group for $2.9 billion. Motorola lost $198 million in the first quarter, extending a streak of uninterrupted losses since Google bought the company for $12.4 billion nearly two years ago.
The first-quarter results were further muddied by a recently completed stock split that created a new category of Class C shares that hold no voting power. The split cut Google’s per share earnings in half to reflect a doubling of the company’s outstanding stock.
Google earned $3.45 billion, or $5.04 per share, in the quarter. That was up 3 percent from $3.3 billion, or $4.97 per share, last year.
If not for costs covering employee stock compensation and other one-time items, Google said it would have earned $6.27 per share. That figure missed the average analyst target of $6.36 per share, according to FactSet.
Revenue rose 19 percent from last year to $15.4 billion.
After subtracting advertising commissions, Google’s revenue stood at $12.2 billion — about $200 million below analyst projections.