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The company blames the poor results on a failure to exploit advertising on social networking sites, claiming that it is more difficult to serve relevant ads to MySpace users that the company previously thought.

"We have found that social networks are not monetising as well as we were expecting," says George Reyes, Google's chief financial officer, to the FT.

The company also reported that the number of clicks its online adverts receive is declining, causing concern among investors that Google's core business is on the wane.

The search giant saw profits grow by only 17% in the quarter, providing a net income of $1.2 billion. This may sound healthy, but is actually the worst performance from the company for several years, although it has done little to discourage CEO, Eric Schmidt.

"We're very pleased with our performance this quarter. It reflects strong momentum in our core business, growing receptivity [sic] to our new business initiatives, and improved discipline in managing our operating expenses."