UPDATE 5-Google quarterly results fail to excite
* Q2 EPS ex-items $5.36 vs Wall St view $5.08
* Q2 revenue $5.52 bln vs Wall St view $5.49 bln
* Shares down 3 pct in after-hours trade (Adds details from conference call, CFO comments)
SAN FRANCISCO, July 16 (Reuters) - Google Inc's (GOOG.O) quarterly profit beat Wall Street expectations, but the weak economy and slump in advertising spending took a toll on revenue growth and the price of its search ads.
Shares of Google fell 3 percent after the results, which exceeded average forecasts but failed to live up to the heightened expectations of investors following Intel Corp's (INTC.O) strong earnings earlier this week. Google shares have risen 4 percent since Intel's report on Tuesday.
"They did decently, but obviously it's not high enough for the Street," said Laxmi Poruri, an analyst at Primary Global Research.
Google's revenue in the second quarter rose 3 percent to $5.52 billion, compared with the average analyst forecast of $5.49 billion, according to Reuters Estimates.
Excluding traffic acquisition costs -- the portion of revenue that is shared with Google partners -- revenue was $4.07 billion.
"People were hoping they would see something around the $4.3 billion range," said Brigantine Advisors analyst Colin Gillis. "Google is changing from a topline growth story to an earnings expansion story."
Google, the largest U.S. Internet search engine, has weathered the global recession better than many of its rivals from Yahoo to Time Warner Inc's (TWX.N) AOL, which have suffered declining revenue in recent quarters.
In a conference call on Thursday, Google executives said it was too early to tell when an economic recovery would emerge, but stressed their own business had begun to stabilize.
"A quarter ago we had no idea where the bottom was," Google CEO Eric Schmidt said.
He noted business had picked up in the online shopping and travel categories that Google sells ads for. Sales chief Nikesh Arora said large advertisers have "come back to the table".
CLICKS
The cost per click -- the amount of money advertisers pay for a click on an ad -- fell roughly 13 percent year-over-year, but rose 5 percent from the previous quarter, Google said. Continued...
