Google shares drop despite 17% profit jump

Google Inc.'s shares plunged by eight per cent in after-hours trading Thursday as the company reported increases in fourth-quarter profit and revenue that fell short of analysts' expectations.

The internet search leader said it had quarterly earnings of $1.21 billion US, or $3.79 per share, up 17 per cent from $1.03 billion, or $3.29 per share, for the same period in 2006.

Revenue jumped by 51 per cent to $4.83 billion US from $3.21 in the same quarter a year earlier.

Google said it would have earned $4.43 cents a share, if not for stock awards given to its employees. That figure was one cent below the average estimate by analysts surveyed by Thomson Financial.

The company's net revenue also missed analysts' estimates by about $60 million, or just under two per cent, leading to a sharp sell-off of Google shares, which plunged $45 to $564.30 in after-hours trading.

There is growing concern that Google won't be able to sell as much online advertising — its main source of profit — as consumers reduce their spending amid ominous signs of a recession in the U.S.

The company's fourth-quarter profit increase was the smallest in its 14 quarters as a publicly held company. It was just the third time that Google's earnings failed to exceed analysts' estimates.