Google Inc's stunning 54 percent spending surge spooked investors already worried that its new CEO may take his eye off the bottom line to chase revenue growth, driving shares of the world's leading Internet search engine more than 5 percent lower.

Investors zeroed in on the surge in expenses to $2.84 billion, which dwarfed a 29 percent jump in net revenue and reflected a record hiring spree and company-wide salary raises.

Analysts now expect co-founder and new Chief Executive Larry Page to keep spending on new products to spearhead an aggressive push into areas such as social networking and mobile businesses.

The 38-year-old media-averse technology wiz -- who took over as CEO this month from decade-long veteran Eric Schmidt -- came on a conference call with analysts for just a few minutes, disappointing some eager to hear his plans to jump-start growth and innovation.

Google plans to hire more than 6,000 people this year, after taking a record 2,000 on board in the quarter and raising salaries by about 10 percent across the board on January 1.

You got expenses growing faster than revenue and some people were caught by surprise by the willingness of the company to spend, said BGC Partners analyst Colin Gillis.

But Larry Page has signaled pretty clearly that he is going to be driving up expenses. If the expenses are targeted and result in future revenue streams, then good for Larry. If not, that results in an undisciplined spending approach.

Page is expected to bolster innovation and cut bureaucracy as Google battles social networking leader Facebook and Apple Inc.

Shares of Google, which underperformed the market in 2010, are down roughly 9 percent since the company announced in January that Page would replace Schmidt. This week, Page moved swiftly to streamline decision-making at Google's upper ranks by reshuffling reporting lines, but investors are anxious about how the management change could affect the company.

WHAT'RE YOUR INTENTIONS?

The company posted net income of $2.3 billion in the first quarter, or $7.04 a share, up from $1.96 billion, or $6.06 a share, in the year-ago period.

Excluding certain items, Google said it earned $8.08 a share, below the average analyst expectation of $8.10 a share.

Google's net revenue rose to $6.54 billion in the first quarter, above the $6.32 billion expected by analysts.

The average cost-per-click to advertisers for its search ads in the first quarter grew about 8 percent year-over-year and decreased 1 percent from the fourth quarter.

Page, with his succinct speech on Thursday, remains very much uppermost on investors' minds.

Google is ramping up efforts to supplement its core search advertising business with revenue from display and mobile ads. And the company is increasingly focused on social networking and the local ad market, where rivals Facebook and online coupon service Groupon rule the roost.

Page's attitude toward spending on such strategic areas, as well as on less crucial initiatives such as self-driving cars, and the potential impact on Google's profit margins are high on investors' list of concerns.

I don't think his focus is going to be on managing to margins. I think his focus is going to be on managing to topline growth and new business areas, said Oppenheimer & Co analyst Jason Helfstein.

The key here is margins are weaker and as a result there's still a question about the company's long-term spending intentions.

Shares of Google fell nearly 5 percent to $551.34 in after-hours trade.

(Writing by Edwin Chan; Editing by Richard Chang)

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