Dear Google,

Are you feeling alright? You look a little pale...

This morning UBS analyst Ben Schachter lowered his expectations for the search leader's 2008 and 2009 revenue by 1 percent and cut his price target for the stock to $590 from $650.

"We continue to like GOOG longer-term, but believe that a reset of near-term investor expectations as well as continued bearish sentiment may mean the ride is bumpy over the next few months," Schachter wrote in a note to clients.

Google's stock price has fallen about 30 percent in the last three months, amid growing concern that a recession could put a damper on internet ad spending.

Schachter cited the just released ComScore numbers for January paid searches, which show Google's sponsored clicks down 12 percent quarter over quarter, and effectively flat year over year. That is "the first time ever according to comScore's data that both sets of growth rates were not positive," the analyst noted.

"We are lowering our 2008 and 2009 revenue estimates approximately 1 percent to $15.7 billion and $19.2 billion, respectively," Schachter wrote, "Our 2008 and 2009 [earnings per share] estimates go to $20.00 and $24.10, from $20.37 and $24.58. Our price target goes to $590 from $650 based on our lower forecasts and negative investor sentiment."

One month ago, Google announced fourth quarter earnings for 2007 that failed to meet Wall Street expectations. At the time, Schachter wrote, "we believe that for the stock to appreciate significantly from current levels and see multiple expansion, the company needs to diversify its revenue stream beyond the text-based ads that drive the vast majority of its current revenue."

One way to do that would be to buy the "audience" half of AOL, which Time Warner has separated from the web-access business — especially if the Microsoft-Yahoo merger goes through, which would put major pressure on Google's plan to expand in display advertising.

Another challenge for Google is monetizing social networks. Last month, Google co-founder Sergey Brin said that the company was having trouble selling as many ads on social networking sites as it had hoped.

"I don't think we have the killer best way to advertise and monetize social networks yet," Brin said then. "Some of the things that we were working on in Q4 didn't really pan out."

Google has an expensive three-year partnership with News Corp.'s MySpace that includes a guaranteed payment of $900 million to News Corp., for the right to handle search ads for the social network.

Yesterday, TechCrunch reported that News Corp. was in talks with Microsoft about replacing Google as MySpace's ad partner, but a News Corp. spokesperson told Silicon Alley Insider that the report was "100 percent categorically untrue."

by Sam Gustin