Google shares hit hard

Google Inc. shares fell more than eight per cent on Friday, a day after the company produced quarterly revenue and profit that missed analysts' expectations.

The stock fell $48.40 US to $515.90 US on Nasdaq.

The earnings miss was also coupled with news Friday that Microsoft proposed a $44-billion US takeover bid for Yahoo.

The internet search leader said after the close of trading Thursday that it made $1.21 billion US, or $3.79 per share, in the fourth quarter, up 17 per cent from $1.03 billion, or $3.29 per share, for the same period in 2006.

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.

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

The company's net revenue missed analysts' estimates by about $60 million, or just under two per cent.

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.