Shares in Google fell almost 20 per cent overnight as the search gorilla’s earnings results fell foul of analyst’s expectations.

It is the first time since the company’s IPO that it has missed the Wall Street earnings targets taking the lustre off a share that has more than quadrupled investors money. A massive rise of 82 per cent in net income and 86 per cent in sales was not enough to allay analyst’s fears that the stock is over-valued.

The resulting fall in valuation is in excess of US$15 billion from its market capitalisation of US$128 billion.

The company blamed a higher than expected tax bill resulting from higher costs of overseas operations on the short fall. At the tax rate initially forecast by Google, adjusted earnings would have been US$1.81 per share, versus the consensus of US$1.77.

Revenue, excluding traffic acquisition costs of US$629 million, was US$1.29 billion, nearly double the US$642 million in revenue net of such costs it reported in the year-earlier fourth quarter. But the stock is priced “for perfection” offered one analysts and anything short of perfection was duly punished.

In an analyst conference call, Google CEO Eric Schmidt said the company plans significant investment this year, most of that on infrastructure (and real estate). “We are going to invest for the long term and make some really big bets,” he said without offering more detail.

The company made a one-off US$90 million donation to the Google Foundation and the results included a US$58 million charge in stock compensation.

Net income for the fourth quarter rose to US$372.2 million, or US$1.22 per diluted share, from the year earlier quarter’s US$204.1 million, or US$0.71 cents a share.