Google's cost surge spooks investors

Share price falls despite planned investment
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Internet giant Google's shares fell off the back of a startling increase in the firm's operating expenses with investors fearing the departure of Eric Schmidt will see costs spiral out of control.

Google posted an impressive 27 per cent increase in revenue to $8.6 billion US dollars but the firm posted an astounding 54 per cent increase in spending to $2.84 billion which resulted in Google's share price falling nearly 6 per cent in extended trading.

However an increase in running costs was to some degree expected, the company plants to hire an addition 6,000 staff this year, having already added 2,000 to the pay roll and increasing salaries in order to stem the flow of top staff to rival tech companies.

Just one month into the job since replacing previous CEO Eric Schmidt, tech wonder and co-founder Larry Page has already altered management structure to enable the firm to make decisions more quickly than it has in the past.

"This is all exactly as we planned, and I'm very excited about those changes," Page told analysts.

Google CFO Patrick Pichette said of the increased investment: "We just happen to have great opportunities to fuel."

As with other tech giants, Google is investing heavily to make a grab for emerging areas of business such as local services, video advertising and mobile.

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