Google Inc's quarterly results fell short of Wall Street's heightened expectations for the holiday season as Europe's economic malaise weighed, triggering a 9 percent slide in its shares.

The No.1 Internet search engine underperformed on both revenue and earnings in the fourth quarter, disappointing investors who had counted on record U.S. online-commerce to prop up results.

The company's shares dived to about $583 in after-hours trade.

Expectations had got ahead of themselves for Google, largely because investors don't have a good feel for what happens outside the U.S., said Stifel Nicolaus analyst Jordan Rohan. North America has remained strong, but there are parts of the world where there's a lot of economic pressure.

I would have to assume Europe -- particularly Germany and some others undergoing austerity measures -- the underlying demand in those countries is weak.

Google's net revenue, which excludes fees shared with partner websites, was $8.13 billion in the fourth quarter, versus $6.37 billion a year earlier. Analysts polled by Thomson Reuters I/B/E/S had looked for net revenue of $8.4 billion.

That shortfall marks a rare miss for a company that has exceeded Wall Street's revenue targets for eight consecutive quarters.

EXPENSES SWELL AGAIN

The amount of clicks on Google's search ads increased sharply during the last three months of the year, but the cost per clicks - the money that Google charges advertisers for the ads - decreased 8 percent from the third quarter and 8 percent from the year ago period.

Operating expenses increased to 32 percent of revenue during the fourth quarter, versus 30 percent of revenue at this time last year.

Google said on Thursday it earned $2.71 billion, or $8.22 per share in the fourth quarter, compared with $2.54 billion, or $7.81 per share in the year-ago period.

Excluding certain items, Google earned $9.50 per share, lagging forecasts for $10.49 a share.

Shares of Google were down 9 percent at $583 in after-hours trading on Thursday. Some analysts questioned whether Google was investing heavily on projects -- such as its Android mobile software or Chrome Internet browser -- at the expense of the bottom line.

Google got hit with the ugly stick, said Fort Pitt Capital analyst Kim Forrest. You've got to ask yourself, 'Where is the money going? What are they spending it on?' I have a feeling it is on platforms like Chrome and Android, and things like that.

(Editing by Phil Berlowitz and Edwin Chan)

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