Google Inc. made more money than ever in the second quarter, even though its revenue growth slowed like never before.
The latter part of that paradox bothered investors, causing Google shares to fall $14.62, or 3.3 percent, to $427.98 in extended trading Thursday after the second-quarter results were released.
The market's negative reaction largely reflected the high expectations surrounding Google. Since falling below $300 in early March, its stock price had surged by about 50 percent, reflecting Wall Street's faith in the company's ability to sell more online ads even as the United States slogs through its worst recession since World War II.
For the most part, Mountain View-based Google has delivered. Its second-quarter profit rose 19 percent to $1.48 billion, or $4.66 per share - the highest net income for any three-month period since Google went public in five years ago.
Google pulled it off largely by making the first major cuts to its payroll, getting rid of employee freebies like bottled water and dramatically reducing its spending on data centers and other long-term projects.
The frugality has helped Google overcome its decelerating revenue growth during the past year. The pace slackened again in the second quarter as revenue rose just 3 percent to $5.52 billion.
It marked Google's second straight quarter of single-digit revenue growth, an unsettling trend at a company that hadn't fallen below a 30 percent gain until the final three months of last year.
"They are pulling more levers than they have had to in the past and that's a sign of a mature company," said Brigantine Advisors analyst Colin Gillis. "People don't like that because Google is supposed to be a growth company."
