GOOGLE ANNOUNCED its second quarter results on Thursday after the close of trading on Wall Street.

The Mountain View, California Internet search and advertising leader reported revenues of $5.37 billion in the quarter ended June 30, up 39 per cent over last year's second quarter.

It said its second quarter net income was $1.25 billion, an increase of just over 35 per cent year over year.

Its GAAP earnings per share for the quarter jumped 34 per cent to $3.92. (GAAP earnings per share include material financial items related to stock-based employee compensation. Stock options are a significant component of Google's employee compensation practices.)

Non-GAAP earnings per share was $4.63, somewhat below Wall Street analysts' average forecast of $4.72.

Investors reacted swiftly to Google's failure to beat analysts' earnings estimates. Its shares were trimmed by almost $40 to $493.50, down nearly 7.5 per cent, in after-hours trading.

The market's fear apparently is that Google's near-term future revenue and profit growth might be adversely affected by the slowing US economy, which grew by only one per cent last quarter, compared with 3.4 per cent growth during the second quarter of last year.

The online advertising market that Google dominates is expected to grow by only two per cent this year. Internet advertising accounts for more than 60 per cent of Google's revenue.

Thursday's drop was the largest single day fall in Google's share price since the company went public in 2004. µ