Google’s first quarter earnings fell short of Wall Street expectations as the company continued to invest heavily in data center infrastructure and headcount.

Google reported first quarter earnings of $2.8 billion, or $7.04 a share, on revenue excluding traffic acquisition costs of $6.54 billion (statement, preview). Non-GAAP earnings were $8.08 a share. Wall Street was expecting earnings of $8.10 a share on revenue of $6.32 billion.

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Google CEO Larry Page made a brief appearance on the company’s conference call. He said the reorganization has gone as planned and the team has “hit the ground running.” Page added that the quarter worked out well and he was excited about moves to “simplify our org.

“I’m very optimistic about our future,” said Page. Here’s what Page said in full:

It’s great to take just a few minutes with all of you. We’ve had a tremendous quarter, 27% year over year revenue growth in Q1. I’m really excited about that and I think it shows the strength of our business and our continuing — kind of continuing growth really in the tech industry. It’s really still at the beginning from a user perspective. There’s tremendous improvements to be had in our core products and our core business, and we are really excited about that. I also wanted to mention a little bit about the management team. Everything we told you last quarter has happened as we expected. It’s all working very well, exactly as we planned. I’ll just reiterate that quickly I am managing the day-to-day operations of Google as CEO, working very closely with my team, and I’m really excited about the progress we’ve had there. I think we really hit the ground running. Eric (Schmidt) of course is focused externally on the government partnerships, government relations, and partnership outreaches. Last quarter alone, he was in Germany, Brazil, Argentina and Spain. He’s been just doing tremendous things for the Company. Sergey, as we mentioned, is working very intensely on a few emerging projects for us. Like I said, this is all exactly as we planned, and I’m very, very excited about those changes. I’d also mention we made a number of changes to just simplify our org and improve our velocity and execution, basically simplify our reporting structures and such. Now I’m very excited about Google and our momentum, and I’m very, very optimistic about our future. I also just want to mention we have Jonathan Rosenberg, who’s usually done this call, is transitioning out of the Company as we have announced a while ago. I really wanted to thank him for all of his insights and hard work and all of the fine communication with all of you. And so we will clearly miss him, and we really want to thank him from the bottom of our hearts. So those are the main things I wanted to say. I’m tremendously excited about all of the things that lay before us as a company, and I also want us to say you’re in very good hands with the team here.

With Google it’s a tug-of-war between earnings today and investments for tomorrow. Indeed, Google beefed up a good bit and ended the first quarter with 26,316 employees compared to 24,400 at the end of the fourth quarter. That level of investment has investors worried about profit margins.

CFO Patrick Pichette kept Google’s common refrain going. “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,” he said. “We will continue to make capital investments.”

All units at Google are expected to show productivity as they invest, said Pichette. Pichette was making the case that Google closely watches expenses, but analysts were skeptical.

On the conference call, Pichette was upbeat about Google’s progress and cited Android, display ad progress and YouTube develop as a win-win platform.

Highlights from Google’s earnings call:

* 350,000 Android devices activated every day.
* Google is investing in marketing the Chrome browser. Why? It’s a locked in user and that lowers traffic acquisition costs. Google is tracking the lifetime value of a Chrome user and there are real returns there.
* Enterprise business continues to grow.
* Japan hurt international revenue.
* New hires are working on areas  “In fact, over half the [newglers] who joined this quarter are going to be working in high potential and revenue growth areas like YouTube, mobile, Chrome, commerce and local, and enterprise,” said Jeff Huber, senior vice president of commerce and local at Google.
* Social is a important as a search results signal.

By the numbers:

* Google’s owned and operated sites generated $5.88 billion in first quarter revenue, or 69 percent of total sales. AdSense delivered first quarter sales of $2.43 billion, or 28 percent of revenue.
* International revenue was 53 percent of the total sales pie in line with the year ago percentage.
* Paid clicks were up 18 percent in the first quarter compared to a year ago. Cost per click was up 8 percent.
* Data center expenses—or other cost of revenue—were $897 million, or 10 percent of sales.
* Google ended the quarter with $36.7 billion in cash and equivalents.