SHARES in Google fell below $350 last night for the first time since October, as fears grew that the shares could plummet by as much as 50 per cent this year.

The internet search engine group’s shares closed down 4.7 per cent at $345.33 last night after a report in Barron’s, the American financial magazine, suggested that its rivals, including Yahoo! and Microsoft, could put pressure on Google’s revenue growth.

The magazine said that the share price could tumble if the company’s revenues fall short of bullish analyst forecasts for 2006.

The fall leaves Google’s shares more than 25 per cent short of the all-time high of $475 that was reached last month.

The group’s shares have soared since its $3.3 billion initial public offering in August 2004, which valued the shares at $85. The Nasdaq-listed group is now valued at some $100 billion.

However, last night Wall Street analysts stuck by their bullish long-term forecasts, arguing that Google’s long-term growth prospects remain compelling.

Mark Mahaney, an analyst at Citigroup, reiterated his “buy” recommendation and said that he had a $490 price target.

Sasa Zorovic, an analyst at Oppenheimer, has a $540 price target, but admitted that there were some concerns about costs.

Despite rising traffic to its site and its continued dominance of the internet search market, there remains uncertainty over cost pressures and trends in the pricing of keyword searches, through which the company sells advertisements.

Eighty-eight per cent of Google’s revenues flow through to the profits level. Any shortfall in revenues is, as a result, potentially significant to profit forecasts.

This month Google shares fell sharply after it missed fourth-quarter targets. An 82 per cent jump in quarterly profits failed to satisfy investors, who had been guided by bullish Wall Street forecasts.

Selling by investors prompted a slide in Google’s shares, from which it has failed to recover.

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