Google Inc. has successfully tackled a lot of complex problems during its first decade in business, but even the Internet search leader may be hard pressed to find a way to sustain its rapid earnings growth amid a sputtering economy in the United States and parts of Europe.

The challenge came into sharper focus late Thursday after Google released second-quarter earnings that fell below analysts' expectations and management acknowledged the economic turmoil appears to be causing consumers to click less frequently on the ads that generate virtually all its profits.

That was enough to unnerve already jittery investors, despite Google management predicting the Mountain View-based company will still thrive even if the economy weakens further.

Google shares fell $40.69, or 7.6 percent, in extended trading after finishing Thursday's regular session at $533.44. If the descent holds in Friday's trading, it will wipe out about $13 billion in shareholder wealth and leave Google's stock price below $500 for the first time in three months.

The red flags raised Thursday included a dramatic slowdown in the company's hiring pace and Google Chairman Eric Schmidt's description of the economy as "challenging." Google's chief economist, Hal Varian, even participated in the company's conference call for the first time to discuss business conditions.

"That was a tip-off," said Cantor Fitzgerald analyst Derek Brown. "Economic sluggishness has entered the discussion at Google, more so than we have ever heard."

Google earned $1.25 billion, or $3.92 per share, during the three months ended in June. That represented a 35 percent increase from net income of $925 million, or $2.93 per share, at the same time last year.

If not for costs incurred for employee stock compensation, Google said it would have earned $4.63 per share. That figure missed the average earnings estimate of $4.74 per share among analysts surveyed by Thomson Financial.

Google's second-quarter revenue fared slightly better than earnings, rising 39 percent to $5.37 billion from $3.87 billion at the same time last year.

More than half the revenue _ $2.8 billion _ came from international markets, helping to offset some of the economic weakness in the United States.

After subtracting commissions paid to its ad partners, Google's revenue totaled $3.9 billion _ about $30 million above the average analyst estimate.

Stanford Group analyst Clayton Moran interpreted the performance as "confirmation that there is a slowdown in Internet advertising that's affecting Google."

The trouble may stem more from reluctant consumers than advertisers.

The number of paid clicks on the Web sites operated by Google and its partners during the second quarter fell 1 percent from the first quarter, the first sequential downturn that the company has ever reported in the category. The 19 percent year-over-year increase in Google's paid clicks also was the company's lowest ever.

"Consumers are being cautious in their online spending patterns, just as they are in their off-line spending patterns," Varian told analysts during Thursday's conference call.

Google's second-quarter showing could foreshadow more difficulty for rival Yahoo Inc. when it releases its results for the same period next Tuesday.

After years of earnings disappointments, Yahoo needs to post good numbers and offer an upbeat outlook to reassure its shareholders as it tries to fend off a rebellion led by activist investor Carl Icahn. A rocky quarter would give Icahn more fodder in his effort to oust Yahoo's board at the company's Aug. 1 annual meeting so he can sell all or part of Yahoo to Microsoft Corp.

A big part of Google's earnings letdown had nothing to do with online ads.

After paying $3.2 billion to buy ad service DoubleClick in March, Google had less cash in the bank and was receiving less income on its remaining money because of lower interest rates.

Those factors produced just $58 million in interest and other income in the second quarter, down from $137 million a year ago.

"We continue to believe we are very well positioned," Schmidt assured analysts.

Varian told analysts the company might even benefit from a "Wal-Mart effect" if rising energy and food costs prod budget-conscious consumers to search for deals more frequently online.

Long known for its free spending ways, Google appears to be watching its budget more carefully too. The company added just 448 employees during the second quarter _ the fewest hired since the fourth quarter of 2004 when it ushered in 353 new workers.

Since 2004 Google has been hiring an average of nearly 1,200 workers per quarter to expand its payroll to 19,604 employees.