Google's rapid growth slows in last quarter

SAN FRANCISCO -- Google Inc.'s earnings and revenue growth decelerated more than analysts anticipated during the fourth quarter, magnifying worries that the Internet search leader's moneymaking machine is bogging down as the U.S. economy teeters on the brink of recession.

The quarterly results released Thursday spooked already jittery investors, causing Google's slumping stock price to plunge 6.5 percent farther.

Google earned $1.21 billion, or $3.79 per share, during the final three months of 2007. That's up 17 percent from net income of $1.03 billion, or $3.29 per share, in the same period a year earlier.

It's the first time Google's quarterly profit has climbed by less than 25 percent since the Mountain View-based company went public nearly 3½ years ago.

If not for stock awards given to its employees, Google said it would have made $4.43 per share -- a penny below the average estimate among analysts polled by Thomson Financial.

The earnings would have been even lower if Google hadn't benefited from an abnormally low tax rate of 25 percent in the quarter. American Technology Research analyst Rob Sanderson estimated Google would have earned 11 cents less if the company had been taxed at its more typical rate of 27 percent.

Chief Executive Eric Schmidt rebuffed the notion that the feeble U.S. economy undercut Google's growth.

"I am happy to say we have not seen a negative impact from the rumors of a future recession," Schmidt told analysts during a Thursday conference call.

Company co-founder Sergey Brin said in an interview that the company hasn't seen evidence of the recent economic turmoil affecting its business.

"I'm very happy with things," Brin said. "I think things are going really well."

Investors apparently don't share Brin's optimism. Concerns about the crumbling economy denting Google contributed to a nearly 20 percent decline in the company's stock price this month. Now it looks like the sell-off will continue as the calendar turns to February.

Google shares rose $16.03 to finish at $564.30 in Thursday's regular session then plunged $36.90 in extended trading after the fourth-quarter results came out.