If you enjoyed the back-and-forth between Tim Beyers and I regarding satellite star Sirius XM Radio (NASDAQ:SIRI) earlier this month, you’re in luck: We're back for another installment of Dueling Fools.

Today we're taking a closer look at a company that we both really like. Tim is the bull, and I'm donning the bear suit because as much as I dig the company itself, I'm worried about the near-term prospects for Google (NASDAQ:GOOG) as an investment.

Where do I begin? Oh, I know. Let's start with last week's iffy earnings report.

About last week
Google's shares rose after its latest quarterly report, after the search-engine giant beat Wall Street expectations. But let's view the period in absolute terms:

  • Revenue grew by just 6% over last year's first-quarter showing.
  • More notable top-line news: Revenue levels shrank by 3% sequentially, which is important since there isn't a lot of lumpy seasonality here.
  • Non-GAAP net income also rose just 6% over 2008's first quarter, with a mere 1% advance sequentially.

Is this the kind of growth that Google investors signed up for? This is the first sequential revenue decline in the company's history. And since it was a 3% decline in both the company's owned sites as well as its Google AdSense network, it was a failure on both ends of the Big G gravy train. Analysts also see revenue before traffic acquisition costs clocking in at $4.04 billion for the current quarter, handing Google another sequential dip.

A troubling metric in the report is that paid clicks at Google actually climbed 17% higher during the quarter over last year's throughput. In other words, the average lead generated by Google was worth quite a bit less than it used to be.

Now, an apologist would argue that this is actually good news for Google. The crummy economy is forcing all advertisers to scale back on their marketing spends. Even a growing subscriber service like Sirius XM is seeing a decline in ad revenue. The fact that clickthrough rates are up, a bull would pose, is a welcome indicator that ad blindness hasn't kicked in. The "pay-per-click" model is alive and well. Google just needs to wait for sponsors to bid up keywords again.

Oh, if only it were that optimistically simple.

The rise and fall of search
Where is the growth at Google these days? It is not necessarily at its search engine or even its AdSense partner network. Google's taking bigger steps in areas like video-sharing with YouTube and e-mail with Gmail. I'm a big fan of both of those services, but where is the monetization glory?

Gmail rocks, and it's gaining ground on niche leaders Yahoo! (NASDAQ:YHOO), Time Warner's (NYSE:TWX) AOL, and Microsoft's (NASDAQ:MSFT) Hotmail. Boy, is Google going to be mad when it catches up to the party.

How hard is it to monetize electronic mail? Well, let's just sum it up by saying that Yahoo! is on its third CEO in as many years, Time Warner can't seem to hand off AOL to anybody, and Microsoft is still posting losses in its online business.

Making chunky video files pay off may prove to be even trickier, unless you happen to be the content-delivery network dishing out the bandwidth like Akamai (NASDAQ:AKAM). Even if it happens, movie studios and record labels are hungry for thicker slices of the revenue-sharing action.

In short, it's growing in areas that are a far cry from the low-hanging -- and high-margin -- fruit of its paid search stronghold.

Taking the high (-margin) road
Eureka! All Google has to do is grow its paid search business. And naturally I use the word "grow" loosely when it comes to a company that has shuttered several projects, slashed payroll, and felt so unconfident about its share price coming back to revisit its highs that it shamelessly repriced employee stock options lower.

That last point is still eating away at me, as it should any honest shareholder who watched the company dilute investors this year with an accounting maneuver that essentially rewards incompetence.

Tweaking stock options may fly in smaller companies like Rainforest Cafe or Hot Topic (NASDAQ:HOTT) that can embarrass shareowners in the shadows, but not Google. Isn't this the "do no evil" company?

Then again, after going over last week's quarterly report, I'm also left wondering if this is a growth stock.

The identity crisis is natural. Google has been a scorcher over the years in its role as the gateway to somewhere else. Advertisers pay Google to send traffic their way, so Google is essentially a company that profits from its un-stickiness.

The problem? Well, folks these days are spending too much time on sticky sites like Facebook and Twitter. They have already found their friends, can tap them for local suggestions, and can always just launch a search query from inside one of the countless non-Google social networking sites.

So stop dreaming about how Google is going to grow in the future. Start worrying about how to make sure it doesn't keep shrinking. 

Other ways to get off of my cloud:

Akamai Technologies and Google are Motley Fool Rule Breakers recommendations. Microsoft is a Motley Fool Inside Value pick. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz isn't calling for a search-engine search party, but he may as well. He does not own shares in any of the stocks in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.