Tech darling falters again

Is Google Inc. mortal after all?

After years of defying gravity, the Internet search leader's stock continued its recent tumble Thursday when a profit and sales shortfall led to a 6.5% slide in after-hours trading.

It was a rare miss for Google, the darling of tech stocks. The disappointing fourth-quarter results heightened investor concern that a faltering economy could slow growth in online advertising sales.

Chief Executive Eric Schmidt insisted that the company had seen no effect "from rumors of future recessions."

Also troubling investors, Mountain View, Calif.-based Google said it expected to continue spending aggressively. It spent $678 million -- well above analysts' forecasts -- in the quarter on data centers, servers and networks. It did scale back hiring yet still added 889 people, bringing its head count to 16,805.

Google shares gained $16.03, almost 3%, to $564.30, then fell $36.90 to $527.40 after the earnings release. They are down sharply from their all-time high of $747.24 in early November.

"Google's metabolism is catching up with it," Motley Fool analyst Rick Munarriz said. "Until now, Google has been like a teenager that keeps eating at the buffet, and now it's going straight to the hips."

Net income rose to $1.21 billion, or $3.79 a share, from $1.03 billion, or $3.29 a share, a year earlier. Revenue jumped 51% to $4.83 billion from $3.21 billion.

Excluding stock-based compensation and other factors, it earned $4.43 a share, falling a penny shy of the average Wall Street forecast of $4.44, according to Thomson Financial. Google's revenue, excluding commissions paid to partners, was $3.39 billion, also below analysts' estimate of $3.45 billion.

The company didn't miss by much, but investors have come to expect it to trounce their expectations.

For the full year, Google generated $16.6 billion in revenue, nearly all from search advertising.

Google gets paid when Web users click on ads. But it didn't see its usual growth in those clicks, which increased 30% year over year rather than the 50% averaged in previous quarters.

Co-founder Sergey Brin said Google had not seen -- and did not expect to see -- any sign of consumers clamping down on spending or online advertisers retrenching.

"We have studied the data pretty carefully internally," he said in an interview. "We have had economists looking at it, and we don't see any macroeconomic impact on us."