Google net profit up 17% on spurt in online advertising

Buoyed by a rise in its online advertising revenue, Google Inc has registered 17% growth in net profit to $2.3 billion in the January-March quarter of 2011.

In the year-ago period, the company had a net profit of $1.96 billion, Google said in a statement.

Google's revenue rose by 27% to $8.58 billion in the first quarter ended March 31, 2011 from $6.77 billion in the year-ago period.

The company has attributed surge in quarter earnings to revenue generated by paid clicks on its search ads, which include clicks related to ads served on Google's sites and the sites of its partners.

"We had a great quarter with 27% year-over-year revenue growth," Google CFO Patrick Pichette said.

"These results demonstrate the value of search and search ads to our users and customers, as well as the extraordinary potential of areas like display and mobile. It is clear that our past investments have been crucial to our success today, which is why we continue to invest for the long term," Pichette added.

Google-owned sites generated revenues of $5.88 billion in the first quarter of 2011. This represents a 32% increase over first quarter 2010 revenues of $4.44 billion.

However, higher marketing expenses along with the increased labour costs pushed Google's operating expenses by 54%, reducing its operating margin by four points to 33%.

According to the search engine, it hired more than 1,900 people in the first quarter, taking the total to 26,316 employees worldwide. The hiring was as part of a plan to add 6,000 employees this year.

The company said that aggregate paid clicks, which include clicks related to ads served on its sites and the sites of its partners, climbed 18% over the first quarter of 2010.

In addition, Google's partner sites posted revenues, through AdSense programs, of $2.43 billion, or 28% of total revenues, in the first quarter of 2011. This indicates a 19% rise from first quarter 2010 network revenues of $2.04 billion.