Shares of Google, owner of the world's most popular internet search engine, tumbled as much as 7.1% in the biggest drop since February 2006.

But some observers viewed Google's possible purchase of spectrum as yet another game-changing move by the firm that may be among its most ambitious.

"This is the moment when the internet mindset finally engages with the telecom mindset in a concrete way, " wrote Susan Crawford, an internet expert and law professor, in her communications technology blog.

"Google's point is that highspeed internet access is just that . . . access. Google wants the pipes to be commoditised, to be as open as possible so that, like the internet itself, this transport can make possible all kinds of innovation, economic growth, and creativity. The pipes, the sidewalks, shouldn't be controlling or monetising the conversations that we have as we walk along."

Google's interest in the auction heightened concern that the company is spending too much, market watchers said.

Officials hired more employees than expected, boosting its workforce by 13%, mostly in sales, marketing and engineering. Research costs soared 88%, outpacing sales growth.

Spending may be poised to rise again. Google may bid in a wireless auction if the Federal Communications Commission . . . the US equivalent of Comreg . . . adopts certain licence conditions as part of the auction process, such as requiring carriers to lease the airwaves at wholesale rates to other firms, according to a company statement on Friday.

Google is battling AT&T and Verizon Wireless, the two biggest US mobile phone service companies, over proposed rules for the auction. Verizon Wireless says Google's proposals wouldn't generate enough revenue for the government.

The quarter marked the second time Google has missed analysts' profit estimates. The shares, which have surged more than five-fold since they were first sold to the public in 2004, had advanced 19% this year until Friday.

"In this kind of market, in this day and age, if you come in below, you're always going to have a bit of pressure put on you, " Atlantic Equities LLP's Edward Lewis said in an interview. The London-based analyst called the price a buying opportunity.

Excluding stock-based compensation costs, profit was $3.56 a share, trailing an average estimate of $3.57 in a Bloomberg survey of analysts.

The company doesn't forecast profit or sales.

Google added 1,548 jobs last quarter, bringing its total to 3,786. Research and development spending jumped to $532.1m from $282.6m a year earlier. Sales and marketing costs soared 81% to $196.4m.

"We overspent against our own plan on headcount, " chief executive Eric Schmidt said during a conference call. "We decided it was not a mistake. The kind of people we brought in were so good that we're glad we did this."

To improve its online maps, Google added 360-degree views of streets and intersections in May, giving users more detailed pictures of cities such as New York and Las Vegas. Google upgraded its mobile search engine in the US, China and Europe and opened a research centre in Tel Aviv, Israel.

"Google is investing in a lot of the right things, " said Andrew Frank, a New Yorkbased analyst with research firm Gartner. "They are clearly trying to attract and retain the right talent."

Google has stepped up its acquisitions as growth slows.

The company announced eight purchases in the quarter, its fastest pace since going public. The largest deal was an agreement to pay $3.1bn for DoubleClick Inc, a maker of software for managing internet ad campaigns.

Additional reporting by Bloomberg