Google warns on growth

INVESTORS' infatuation with online search firm Google may be about to sour after the company poured cold water on immediate growth prospects and raised fears of intensifying competition.

In a regulatory filing with the Securities and Exchange Commission, Google said that although its revenue grew faster in the third quarter, which ended 30 September, than in the second quarter, its growth rate has generally declined.

The company said it expects its growth rate to slow down as a result of increased competition and the 'inevitable' decline in growth as its revenue rises. It also warned competition was becoming stronger. 'We expect that Microsoft will increasingly use its financial and engineering resources to compete with us,' the filing said.

'Yahoo! has become an increasingly significant competitor, having acquired Overture Services, which offers internet advertising solutions.'

Google also reported that it may experience a drop-off in advertising sales as it revamps its business policies.

The news sent Google's shares tumbling by nearly $5 (£2.72). They now stand at $167.54, down from their high of $201.