Google Gored After Shortfall (Update 2)

Updated from July 17

SAN FRANCISCO -- Just when Google(GOOG Quote) had managed to erase doubts about its ability to perform in a down economy, now it must start all over again.

The tech giant missed Wall Street's estimates for the second quarter, sending the stock price back near levels where it had hovered in April, when investors had anticipated a weak first quarter.

Google proved investors wrong by topping first-quarter estimates, but could not pull off a similar performance Thursday when reporting second-quarter numbers. As a result, shares took a beating, falling 8% to $490.23 in after-hours trading.

The company earned $1.25 billion, or $3.92 a share, in the second quarter compared to $925.1 million, or $2.93 a share a year ago. Adjusted for certain items, the company earned $1.47 billion, or $4.63 a share, falling well short of analysts' estimates of $4.74 a share.

Second-quarter revenue climbed 39% from a year ago to $5.37 billion, but grew by a mere 3% from the first quarter. Adjusted for traffic acquisition costs, revenue came in at $3.9 billion, above analysts' consensus expectation of $3.87 billion.

Paid clicks, or the number of times users click on ads, also experienced some weakness. In the second quarter, it grew 19% over the same period a year ago, but declined 1% from the first quarter.

Despite all this, Google Chief Executive Eric Schmidt continued to maintain that the company is in a strong position, even in a slowing economy.

"There is obviously evidence of a slowdown in the U.S. and Europe -- you read it in the paper everyday," Schmidt told analysts on a conference call Thursday. "We continue to believe that we are very, very well-positioned in such a slowdown and especially if it gets worse."