Page last updated at 14:39 GMT, Friday, 18 July 2008 15:39 UK

Google profits trigger concerns

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Google shares fell in after-hours trading

Google's profits rose by less than expected between April and June, raising concerns of a slowdown in the online advertising market.

The internet giant posted a 35% rise in second quarter net profit to $1.25bn (626m) - slightly below forecasts.

The company said its business had held up well despite a more challenging economic environment.

But investors, used to Google outperforming, sent shares tumbling 9.4% to $483.67

"There's the initial shock of this being the best company in the space and it just fell short, said Colin Gillis, analyst at Canaccord Adams.

'Challenging environment'

Google reported a 39% rise in revenue to $5.37bn in the three months to 30 June.

"Strong international growth as well as sustained traffic increases on Google's web properties propelled us to another strong quarter, despite a more challenging economic environment," said Eric Schmidt, Google's chief executive.

The company blamed its below-forecast performance on lower returns from investing its $12.7bn cash pile as a result of volatile interest rates.

The number of paid clicks on websites operated by Google and its partners fell 1% from the first quarter.

Stanford Group analyst Clayton Moran said it was evidence "there is a slowdown in internet advertising that's affecting Google".

Google employed another 448 people during the quarter - the fewest hired since the fourth quarter of 2004.

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