NEW YORK ( TheStreet) -- Highlighting a turning point that the world's largest search company has reached, Google ( GOOG) posted mixed first-quarter earnings Thursday after the bell. While quarterly sales came in well above estimates -- $6.5 billion (excluding traffic acquisition costs, or TAC) vs. $6.3 billion -- profits, which actually rose about 17%, fell short of what analysts wanted to see. Google posted adjusted earnings of $8.08 per share, two cents less than what analysts were calling for.
Tacking on TAC -- the money Google pays affiliates to bring traffic to its network -- the company reported sales of $8.58 billion, representing almost 30% increase over the prior year's quarter. "We had a great quarter with 27% year-over-year revenue growth," said Patrick Pichette, Google's chief financial officer, in a prepared statement. "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's clear that our past investments have been crucial to our success today -- which is why we continue to invest for the long term." The key to Pichette's statement is the bit about long-term investment. Google, which still dominates the search market, has failed to excite investors over the past few years. Despite two quarters of solid earnings beats, the stock is down nearly 7% over the past six months, and has fallen almost 3% so far in 2011. While co-founder Larry Page taking over the CEO role last month telegraphs a sharper focus on innovation and a less bureaucratic operation, near-term profits could suffer as the company looks to expand in new directions. Also, Google's heavy commitment to hiring -- which should help it combat the engineering brain drain from Google to younger Valley rivals like Facebook -- will weigh heavily on margins, analysts have said. Google reported that it hired about 1,900 employees worldwide during the first quarter. Another profit-helping boost: Google reported that both paid-per-clicks and cost-per-clicks rose -- the amount that ad partners pay per click -- 18% and 8%, respectively. New CEO Larry Page made his debut on the company's first-quarter conference call, which TheStreet is live-blogging. Google shares were dropping more than 5% in after-hours trading Thursday with volume already at nearly 1.6 million, according to Nasdaq.com. -- Written by Maggie Overfelt in New York. >To follow the writer on Twitter, go to http://twitter.com/maggieoverfelt. >To submit a news tip, send an email to: firstname.lastname@example.org.