Updated from Feb. 28.

Google ( GOOG) reversed some of Tuesday's sharp selloff by softening remarks made by its finance chief.

Google finance chief George Reyes, speaking at a Merrill Lynch conference in New York Tuesday morning, said that "clearly our growth rates are slowing." The comment sent Google shares down as much as 10% before they settled 7% lower, off $27.76 at $362.62.

"You can see that each and every quarter," Reyes told investors and analysts. "We are going to have to find new ways to monetize the business."

Wall Street was particularly crestfallen at Reyes' notion that Google is running out of room to expand in the area of paid-search, or "monetization." But later Tuesday, Google sought to quell the storm by issuing a statement.

"As we have stated before, monetization improvements will continue to be a key factor driving future revenue growth. We still see significant opportunities to improve monetization and intend to continue to focus our efforts in this area," Google said in a filing with the Securities and Exchange Commission. "Moreover, as we have stated in our SEC filings, our revenue growth rate has generally declined over time and we expect that it will continue to do so as a result of the difficulty of maintaining growth rates on a percentage basis as our revenues increase to higher levels."

Early Wednesday, Google was up $4.38 to $367.

Reyes' remarks stunned Wall Street, which has remained bullish on the company even in the wake of last month's earnings shortfall. On Jan. 31, Google posted a weak fourth quarter, missing estimates by more than 20 cents, though at the time much of the problem was attributed to rising costs and an unexpectedly high tax rate.

Tuesday's comments, suggesting that the company's growth may not match investors' sky-high expecations, were taken as a much more serious warning and could set the stage for further fireworks at Google's analyst day Thursday.

"This is the one of the only times that anyone at the company has said anything about numbers going forward," says Martin Pyykkonen, an analyst with Hoefer & Arnett who rates the shares as a buy with a $550 price target. "Although it's not guidance, it's probably as about as close as you can get from them."

Google shares have more than quadrupled off their 2004 initial public offering amid strong gains in its core Internet search ad market. The company cautioned in last month's earnings call that its focus is on investing in its business and growing for the long haul, but never before has a Google executive said so blankly that investors' expectations may be a bit overblown.

"We're getting to a point where a law of large numbers starts to take root. At the end of the day, growth will slow," Reyes said Tuesday. "Will it be precipitous? I doubt it. I am not turning bearish at all. I think we have a lot of growth ahead of us. It's a question of what rates."

Fans have been trying to get a handle on the company's prospects as competition with the likes of Yahoo! ( YHOO) and Microsoft ( MSFT) intensifies. Google, even in making its remarks Tuesday, stuck with its policy of not providing specific financial guidance.

"Because Google gives no guidance, it can become easy for consensus expectations to continue to rise without any basis," says Scott Devitt, an analyst with Stifel Nicolaus who rates Google shares hold, in an interview. Reyes' remarks "could just be management's way of tempering expectations without giving formal guidance."

Analysts and investors have long complained that Mountain View, Calif.-based Google is too stingy with what information it does provide. To counter this, Google surveyed Wall Street analysts to ask them about the issues that they were interested in learning about ahead of its investors' meeting scheduled for Thursday.

Reyes's remarks are bound to add to the debate among investors about whether Google's shares are overvalued. Most Wall Street analysts encourage people to buy the stock, which has dropped 14% this year.

Bulls Goldman Sachs analyst Anthony Noto and Pipper Jaffray's Safa Rashtchy argued that Reyes' comments were taken out of context.

"George Reyes' comments were implied to be longer term in nature, in our view, and were not implied to signal a near-term trend in business," wrote Noto, who reiterated his outperform rating. "We would advise investors to buy Google with a 30% plus upside to our $500 implied value."

Goldman makes a market in Google shares.

"The fact that Google's growth rates are slowing should be obvious given the law of large numbers,'" writes Rashtchy, who rates the stock buy and whose $600 price target is the highest of any analyst. "We don't believe that there is any new or faster slowdown in Google's growth than we already have modeled."

Pipper Jaffray both makes a market and has provided investment banking services to Google in the past 12 months.

The selloff also hammered Yahoo!, which dropped 91 cents to $31.83, and eBay ( EBAY), off $1.73 to $39.55.