MOUNTAIN VIEW, Calif. ( TheStreet) -- Google ( GOOG) says great things are happening beyond search. Investors and analysts want proof.

Google has mastered the search ad business and holds nearly 70% of the market, but fans are more than anxious to see the Internet giant add more sources of revenue to the mix. Yahoo! ( YHOO) and Microsoft ( MSFT) are the distant no. 2 and no. 3 players chasing Google in the search sector.

Display ads, mobile ads and business applications are all prime growth opportunities, yet 97% of Google's revenue still comes from search ads.

The promise of the long-awaited next-leg-of-growth was once again brought up on Google's earnings conference call, but the company's fourth quarter results still show that the company is all too attached to the rise and fall of search-ad spending.

"Google is increasingly becoming a show-me story," wrote Sandeep Aggarwal, an analyst with Collins Stewart, in a research note. Aggarwal cut his rating on Google to hold, saying the company's valuation rides on its unproven prospects of growth outside its core business.

Yet with those reservations noted, Aggarwal still has one of the highest sales growth estimates for Google this year. He projects Google's 2010 revenue will grow 23% over 2009 levels, a percentage that's well above the 18% from analysts' consensus growth rate, according to Yahoo! Finance.

Investors have taken a dim view on Google and many of tech's proven performers so far this year. Google shares are now down 10% from its 52-week high of $629 earlier this month. This slump comes after a strong run hit for Google shares last year, and it sets an ominous tone for the tech sector amid a fragile economic recovery.

Google executives weren't particularly gloomy on Thursday's earnings call. The company didn't provide any financial projections, but sales chief Nikesh Arora shared his sunny assessment of how display ads in YouTube could be huge contributors to growth.

Google sales chief Nikesh Arora

Video ads are "going to be another big leg for the whole industry, not just for us," Arora said on the call.

The prediction clicked with ThinkEquity analyst William Morrison, who sees a big shift in ad spending headed toward video.

"Our research suggests we may be nearing a tipping point with some brand marketers who are beginning to move large portions of their television budgets to the online channel," Morrison wrote in a research report on Friday.

When it came to other areas like mobile search ads, Google tried to smooth over ripples caused by the splashy introduction of its Nexus One Android smartphone. CEO Eric Schmidt said there were no problems to report when it came to competing directly with device partners. "For the most part," said Schmidt, "our partners understand the message and are okay with it."

Apple ( AAPL) however, seems to disagree. After Google's Android smartphones -- positioned as bold competitors to the iPhone -- were announced, Apple reportedly started discussions with Microsoft to have its Bing search service replace Google on the iPhone.

Google shares fell 4% to $557.89 in early trading Friday.

-- Reported by Scott Moritz in New York.


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