Google (ticker symbol GOOG) has reported their quarterly results, showing increases in revenues, earnings, and operating costs. On Thursday, April 14, the internet search giant reported an 18% increase in net earnings on a 27% jump in revenue, indicative of increasing money flow into internet advertising. However, in order to try to keep up and stay ahead of increasing competition, operating costs increased 54% from the same quarter last year and now account for approximately one third of quarterly revenue, reflecting increased expenditures for salaries, marketing, and R&D. Operating expenses were approximately 50% higher than the year ago quarter and capital expenditures were approximately tripled. Overall, Google posted a quarterly profit of $2.3 billion, or $7.04 a share, up from $1.96 billion, or $6.06 a share, a year earlier. Total quarterly revenue was $8.58 billion, up from $6.78 billion a year ago. Excluding commissions paid to partners, the company’s revenue rose 29% to $6.54 billion.

According to today’s Wall Street Journal (wsj.com), the company has been investing heavily in employee hiring and compensation, as well as new products. Research and development costs soared to $1.23 billion for the quarter, up from $818 million a year earlier. Sales and marketing costs spiked 69% to over $1 billion as Google spent to build its local-ad business and to promote its Chrome browser. Google made a 10% across-the-board salary increase, which is driving up expenses this year. The company has also been shelling out money to keep some top product managers from jumping ship to hot start-ups such as Facebook Inc. and Twitter Inc. Google added 1,916 employees since January, bringing its total work force to 26,316.

While the net results are considered to be disappointing, the overall results are a reflection of continued healthy increases and a broad recovery in online ad spending. According to the Interactive Advertising Bureau, overall internet ad spending increased 15% in 2010 from 2009 to a record $26 billion, eclipsing newspaper advertising for the first time.

GOOG is trading today at $539.14, down nearly $40 or nearly 7% from its’ April 14 closing price of $578.54 on the relatively disappointing report. It is now trading below its’ 200 day moving average, a potentially ominous sign for the stock price going forward

GOOG is now trading below its’ 200 day moving average, a potentially ominous sign for the stock price going forward