More significantly, earnings grew just 17%, and came in at $4.43, lower than Wall Street's $4.45 consensus, amid some significant problems, especially a marked deceleration in paid click growth and difficulties with moving social network inventory).

On the plus side, Google still has a strong cash position, reporting more than $1 billion in free cash flow for the quarter, with operating expenses remaining relatively flat.

While still positive, Google's 52% net revenue growth in the fourth quarter decelerated sharply from the two previous quarters--versus 62% in the third-quarter and 63% in the second--a statistic that financial analysts on the call peppered CEO Eric Schmidt and CFO George Reyes with questions about. And aggregate paid clicks, which the giant defines as "clicks related to ads served on Google sites and the sites of our AdSense partners," also showed much less growth than in previous quarters.

Aggregate clicks were only up 30% from fourth-quarter 2006 to fourth-quarter 2007, in contrast to the 45% growth in the third quarter. Reyes said that the growth deceleration was likely due to the "impact of quality improvements" that Google made its ad platforms, like changing the clickable area of AdSense ads and standard algorithmic tweaks. The changes "reduced the number of accidental clicks," Reyes said.

Jonathan Rosenberg, Google's senior vice president, product management and marketing, said that the focus on weeding out low quality ads also contributed to the markedly lower click growth rate, as there were likely just fewer ads to click on. But while aggregate clicks were down, Rosenberg said that average CPCs (costs per click) were up.

During the Q&A, Mary Meeker, managing director at Morgan Stanley, pressed the issue--asking if shareholders should start expecting less than double-digit click growth as the norm. "Do we relate the deceleration to it just being tougher to gain market share?" Meeker asked. "And can we even expect some share loss, if a recession forces slower market growth overall?" Schmidt was quick to respond that "Google doesn't project guidance," and Rosenberg followed up with the fact that the click growth actually exceeded in-house expectations.

Meanwhile, Reyes admitted that the giant was also trying to find the right ad model for its glut of inventory across social networks like Orkut and News Corp.'s MySpace. "Social networking inventory is not monetizing as well as we intended," Reyes said, during his prepared remarks as the start of the call.

Analysts also focused on the social networking issue during the Q&A, asking pointedly whether the gigantic deal that Google cut with News Corp. in 2007 was a source of concern. The giant is obligated to fill News Corp.'s coffers with at least $900 million worth of revenue for ads served on MySpace and other Fox Interactive Media network properties.

"We don't talk about individual partners' performance," said Sergey Brin, Google's co-founder and president, technology. "We had a challenge with social network inventory as a whole. There are various factors that affect how well it monetizes--some which we understand, some which we don't."

When pressed further Brin said: "We have an incredible amount of this inventory. We're running experiments and have seen significant improvements, but I don't think we have the killer best way to monetize it yet."

Shortly after Google released their earnings info over the Web, share price plunged by nearly $40, or roughly 9%, before settling at about $525. That's a far cry from the almost $750 high in November 2007, but Google's stock price had already been trading about 20% lower since early January. Industry analysts like Matthew Ingram note that investor skittishness may be more a sign of concern with the overall economy than any particular discontent with Google, as just about a week ago Apple reported a stellar fourth-quarter 2007 and the stock still got hammered.

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