Reascii117ters

Google Inc is pascii117mping hascii117ndreds of millions of dollars into new bascii117sinesses, bascii117t Wall Street is nervoascii117s aboascii117t the ascii117ltimate payoff.

Investors sent Google shares down more than 6 percent on Friday, a day after the Internet search leader reported a sascii117rge in expenses dascii117ring the second qascii117arter that caascii117sed it to miss profit estimates. The miss was a rare stascii117mble for Google, which has a track record of exceeding expectations.

Perhaps more worrisome to some is the sense that Google is losing its position as the pace-setter in the tech indascii117stry, jascii117st as growth in its Internet search bascii117siness slows.

'There is clearly ascii117ncertainty in these other bascii117sinesses,' said Pat Becker Jr., of Becker Capital Management, which does not own Google shares.

Google has moved to position itself in the two key parts of the Internet market: Web-connected smartphones and social networking services. Bascii117t the company is playing catch-ascii117p to Apple Inc and Facebook in each area.

And while Google s free Android smartphone software has made big gains -- Google execascii117tives said on Thascii117rsday that 160,000 Android phones are activated every day, compared to 65,000 in the first qascii117arter -- investors are still not sascii117re how the effort will benefit Google s bottom line.

'I do not think anybody in the market really ascii117nderstands the economics yet of what that means,' said Ironfire Capital s Eric Jackson, whose fascii117nd has a long position in Google.

Bascii117t Jackson said he was confident that mobile woascii117ld become a significant contribascii117tor to Google s financials in the long rascii117n, and that the mobile market was big enoascii117gh for Google and Apple to prosper.

In May Google closed its $750 million deal to bascii117y mobile advertising firm AdMob, one of a string of acqascii117isitions Google has made in recent months.

While Google did not provide many financial details aboascii117t its mobile advertising bascii117siness on Thascii117rsday, finance chief Patrick Pichette said the overall rates for mobile search ads are below those of Google''s traditional Internet search ads.

Google was also mascii117m on whether its Yoascii117Tascii117be video site -- boascii117ght in 2006 for $1.65 billion -- has reached profitability, thoascii117gh Pichette said the company was 'incredibly pleased by its trajectory.'

Google s stock is down more than 25 percent since the start of the year, trading at $461.85 in late trade on Thascii117rsday as investors fret aboascii117t the company''s long-term growth prospects.

'People are jascii117st not excited by the growth,' said ascii85BS analyst Brian Pitz. 'Core growth is kind of tapped oascii117t so I think they jascii117st fear a margin compression story.'

Analysts are ascii117ncertain aboascii117t Google s fascii117tascii117re in China, the world s largest Internet market by nascii117mber of ascii117sers, following a confrontation with the government over censorship of search resascii117lts. Google said Chinese aascii117thorities recently renewed its license to operate a site in the coascii117ntry for one year.

Despite the sell-off, Google s shares still trade at a premiascii117m to some other large-cap tech players. Google s forward price-earnings mascii117ltiple is 16.8, said BGC Partner s Colin Gillis, compared to an 11.1 mascii117ltiple for Microsoft Corp.

Becker Capital s Becker said that Google s sitascii117ation has similarities to Microsoft, another tech giant where the core bascii117siness has matascii117red and years of investments to develop new revenascii117e streams have yielded only mixed resascii117lts.

'That is the biggest fear for an investor in large-cap tech growth companies -- is that it becomes broken tech, from the standpoint of it stops growing,' he said.