UPDATE 3-Google profit rise fails to impress; shares slip

Reports Q1 EPS of $6.76 vs. Street's $6.60

Q1 net revenue $5.06 bln vs. Street's $4.95 bln

Shares down 5 percent (Adds announcement on CEO, analyst's comments, byline)

By Alexei Oreskovic

SAN FRANCISCO, April 15 (Reuters) - Google Inc posted a 23 percent jump in quarterly revenue on a rebound in Web advertising, but its stock fell 5 percent as the company disappointed some investors accustomed to blowout results.

Investors were also caught off guard by the company's announcement that Chief Executive Eric Schmidt would no longer take part in quarterly earnings conference calls, as it aims to "streamline" the process for such calls.

Google said the decision should not be interpreted as having any other meaning about Schmidt's role at the company.

Analysts said key indicators for the quarter -- including a 7 percent rise in average cost-per-click, which feeds into sales -- appeared strong, even if investors had hoped for more from a company that had beaten earnings forecasts in seven of the past eight quarters.

"All the metrics were good," said Capital Advisors Vice President Channing Smith. "They just weren't good enough."

The stock, which has gained roughly 5 percent since Monday, slid 5 percent to $565.50 in after-hours trade on Thursday. The stock had gained 1.1 percent during the regular Nasdaq session.

"They've had a strong last few days ... and some investors expected Google to beat by a wider margin and price-per-click to come in a bit higher than 7 percent growth," said Edward Jones analyst Andrew Miedler.

Google also said it increased its headcount by nearly 800 employees -- the biggest increase in staff since the first quarter of 2008. Chief Financial Officer Patrick Pichette said the company will keep hiring aggressively throughout 2010, underscoring hopes of a rebound in growth of Internet advertising.

"We are pushing ahead with significant investments," Pichette told analysts and investors on a conference call, in which Schmidt did not participate.

Google posted net income of $1.96 billion, or $6.06 a share, up from $1.42 billion, or $4.49 a share, in the year-earlier period.

Excluding certain items, Google said it earned $6.76 a share, beating the $6.60 average forecast by analysts polled by Thomson Reuters I/B/E/S.

Whispernumber.com, which collects earnings expectations from professional and individual investors, said the outlook for Google's earnings per share was $6.74.

The Mountain View, California-based company, which controls roughly two-thirds of the U.S. search market, said revenue in the first quarter totaled $6.77 billion, compared with $5.51 billion in the year-ago period.

Net revenue, which excludes costs that Google pays to partner Websites, was $5.06 billion, up 2.2 percent from the seasonally strong fourth quarter and above analysts' average estimate of $4.95 billion. (Editing by Edwin Chan and Richard Chang)

REUTERS