updated 2/28/2006 4:37:52 PM ET 2006-02-28T21:37:52

Google Inc.’s shares plummeted by as much as 13 percent Tuesday after the company’s chief financial officer raised the specter of slower earnings growth — a remark that soured recent investor enthusiasm that had been building for the Internet’s leading search engine.

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The latest in a series of abrupt downturns in Google’s stock followed CFO George Reyes’ answer to a question during an investor conference hosted by Merrill Lynch in New York.

After hailing the results of an 18-month effort to boost advertising revenue, Reyes predicted maintaining Google’s rapid growth pace will become increasingly difficult for the Mountain View, Calif.-based company.

“Most of what’s left is just organic growth, which means you have to find ways to grow your traffic,” Reyes said. “Clearly, our growth rates are slowing, and you see that each and every quarter.”

Reyes later put a more positive spin on his remarks. “I am not turning bearish at all,” he said near the end of a 45-minute session that was Webcast. “I think we have a lot of growth ahead of us. I think it’s just a question of at what rate.”

The comments still spooked Wall Street, which had only just recently recovered from the disappointment of fourth-quarter results that provided a firsthand look at Google’s slackening growth.

Google’s shares plunged by as much as $51.87, or 13 percent, on the Nasdaq Stock Market immediately after Reyes’ comments, but then recovered as investors digested his remarks. The shares shed $27.76, or 7 percent, to close at $362.62 on the Nasdaq. The stock, which went public 18 months ago at $85 per share, peaked at $475.11 in early January.

Tuesday’s harsh backlash reminded investors of the extreme volatility of Google’s stock — an offshoot of the company’s steadfast refusal to make financial projections or share many details about its strategy.

Google’s tightlipped approach tends to provoke dramatic reactions to both good news and bad news, said American Technology Research analyst Rob Sanderson.

“We are all playing a bit of guessing game with Google,” Sanderson said. “If there is no guidance coming from a company, it makes people nervous. (Google) made their bed with their own unconventional policies and now they have to lie in it.”

Investors’ opinions of Google have been particularly fickle since the company’s fourth-quarter earnings fell far below analyst expectations a month ago.

The company’s stock initially fell as investors fretted about Google’s slowing growth. Those worries were compounded by concerns about the possible fallout from a legal battle with the Bush administration over a subpoena for users’ search requests and a political furor over Google’s censorship of its search results in China to comply with the country’s free-speech restrictions.

Google’s stock had been bouncing back since mid-February as the company continued to introduce more services and investors began to anticipate more positive developments when management meets with industry analysts Thursday.

Given the upcoming analyst meeting, the timing of Reyes’ remarks was especially frustrating, said David Garrity, director of research for Investec.

Reyes’ remarks echoed previous Google warnings to remind investors that the company is unlikely to maintain its robust growth pace as it matures. Driven by a rise in online advertising as its Internet search engine continues to gain market share, Google’s annual revenue has increased by nearly 14-fold in three years, swelling from $440 million in 2002 to $6.1 billion in 2005.

“We are getting to the point where the law of large numbers start to take root,” Reyes said Tuesday. “At the end of the day, growth will slow. Will it be precipitous? I doubt it.”

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