Updated from 5:14 p.m.

Try this sentence on for size: Google ( GOOG) shares are getting hammered.

The stock dropped more than 7% in late trading Thursday to $509.01 after the Net giant shocked Wall Street with a second-quarter earnings shortfall.

The Mountain View, Calif., company made $3.56 a share, excluding items. Net revenue, excluding the money Google shares with its advertising partners, was $2.72 billion.

Analysts surveyed by Thomson Financial were looking for a $3.59-a-share profit on net revenue of $2.68 billion.

At such a high EPS figure, the miss is less than 1%. But it comes as a big surprise from a company known to breeze right by Wall Street forecasts. Indeed, Google topped Wall Street expectations by more than 11% during its first quarter.

Still, Google's miss didn't come because of a lack of top-line growth, with revenue coming in around the high end of analysts' forecasts.

Instead, the company hired more aggressively than even it had planned to during the beginning of the year, CEO Eric Schmidt told investors during a conference call.

"We exceeded spending when it came to headcount, and going forward we will watch this very carefully," Schmidt said. The bulk of the new hires were sales, marketing, and engineering personnel, the company said.

Google also continued to spend aggressively on infrastructure and facilities. But Schmidt also said the company would ultimately benefit from the fast ramp-up of its system.

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