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Google Shares Fall on High-Priced Talent

Google shares tumbled 7 percent in after-hours trading yesterday after the search giant failed to meet earnings expectations by 3 cents per share. But don't panic yet, CNET says, "Google isn't Yahoo." It's simply dealing with certain market forces that can't be controlled.

Specifically, Google CEO Eric Schmidt blamed the cost of adding new talent for weighing down net earnings, which were $925 million for the quarter, 28 percent higher than 2006. Wall Street all but ignored the company's strong 58 percent increase in overall revenues, which totaled $3.87 billion. As CNET says, "It's hard to even call it a hiccup."

Business Week says the reason tech talent is so expensive is because the supply these is low. According to a recent report from the American Electronics Association, fewer than 3 percent of computer systems designers and 2 percent of engineers are out of work--and more than likely, those that are either choose to be so or are already rich.

In all, Google hired 1,548 employees during the quarter, bringing the total number of employees to 13,786. "The kind of people that we brought in are so good that we are happy we did this," Schmidt said during the earnings call, though he admitted the company would reign in employee expenditures in the future. "We overspent against our own plan in the area of head count," he said.

Read the whole story at CNET News.com »

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