Investors question Google's slowing growth

— -- Q: Is it just me, or is Google's growth slowing down?

The 14-year-old company, which went public in 2004, is starting to show some dramatic signs of slowing down. It's getting harder for investors to consider the company a rapid growth story, as its growth continues to decelerate.

Shares of the company were slammed 8% on Jan. 20, the day after it reported a disappointing quarter. But the search-engine company's slowdown in profit growth has been brewing for quite some time.

Google's dramatic slowdown in growth has been most apparent in the number that matters most to investors: earnings per share. The company's earnings per share grew 13.1% in 2011, down from 29% in 2010 and 53% in 2009, says S&P's Capital IQ. In 2006, the company's earnings per share rose 98%, which explains why it won so many fast friends on Wall Street.

On a quarterly basis, Google's dramatic slowdown is also apparent. Earnings per share in the fourth quarter grew 5.3%, down from 28% growth in the fourth quarter of 2010.

Google's management, during its conference call with investors, vowed to jump start growth again. It claims that it's very early in finding ways to make more money from the Android operating system. Android is an operating system the company gives away for free to companies that make cellphones.

But the risks looming are large. The company is amid the process of integrating Motorola's cell phone business, which gets Google into the less profitable hardware business. And Google's famed profits are already in decline. The company's return on investors' equity was 18.7% in 2011, down from 20.7% in 2010.

Slowing growth is just part of the process of maturity for companies. Some companies are able to reinvent themselves during these times and jump start profit and earnings growth with new products and innovation. Yet others succumb to a long period of decline. Time will tell if Google is more than a one-trick pony and can beat the erosion of business maturity.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Follow Matt on Twitter at: twitter.com/mattkrantz