5:30 PM -- Google (Nasdaq: GOOG) shares are down about 70 points in after-hours trading, following the company’s earnings miss. (See Google Reports Q4). Shares recently traded hands for 360, down from Tuesday’s regular day close of 432.66. That’s a 20% haircut.

“Most of the miss was related to the tax impact,” said George Reyes, Google's CFO. Google's tax rate came in at about 42% for the quarter and 31% for the year, compared with annual estimates for 30%. According to Reyes this is because taxes are computed based on a mixture of international and domestic rates making it hard to forecast. Google’s estimated tax rate for 2006 is 30%

Profit growth slowed. GAAP operating income for the fourth quarter of 2005 was $570 million, or 29.7% of revenues. This compares to GAAP operating income of $529 million, or 33.5% of revenues, in the prior quarter. Is this the beginning of longer term profit pressures? As I mentioned in a recent column, investors have put a huge multiple on Google shares, seemingly ignoring the big risks in the company’s business. (See Google Is Overvalued)

CEO Eric Schmidt sounded nonplussed on the earnings call, stating simply that Google will double-down for the future. “The rate of innovation will increase in 2006,” said Schmidt. “We take the long-term view and we invest for the long term and we’re going to make some really big bets.”

Or, as CFO Reyes said, “We are scaling massively.”

— R. Scott Raynovich, Editor in Chief, Light Reading