SAN FRANCISCO, USA: Google Inc's strong holiday-quarter results may take a backseat to growing concerns about long-term margins after it dives into a fiercely competitive smartphone market through its $12.5 billion acquisition of Motorola Mobility Holdings.

Shares in the Internet search and advertising leader, which reports fourth-quarter results on Thursday, scaled a four-year high of $670.25 this month on expectations it benefited from strong online holiday shopping.

But that enthusiasm cooled after Motorola -- the cellphone pioneer that has been lapped by the likes of Apple Inc  -- warned it will miss Wall Street's sales expectations in the pivotal holiday quarter. That would mark the second straight quarter that revenue falls short of target.

Investors have been uneasy about Google's plans to buy Motorola, a deal the companies expect to close early this year. CEO Larry Page has never fully detailed his long-term strategy for the asset other than saying it will be run as a separate company. Analysts say the company fears alienating Samsung and other Motorola rivals that helped its Android platform become the world's foremost mobile-software system.

"You've got this big millstone that's about to be draped around Google's neck," said BGC Partners analyst Colin Gillis.

"Motorola is a low to no-margin business mixing with a higher margin business," Gillis said.

In the short run, Google remains one of the largest beneficiaries of a rapid migration of shoppers and viewers to the Internet from traditional media.

Online spending in the United States reached a record $35.27 billion from November 1 through December 26, up 15 percent versus the corresponding period last year, research house comScore reported.

Analysts believe Google's U.S. search advertising business performed strongly in the last three months of the year, as online retailers and other companies spent heavily to advertise on Google, where two out of every three Internet searches take place.

EUROPE -- SWING FACTOR

Google, which has beaten Wall Street's financial targets for five of the last seven quarters, saw its shares jump 6 percent in October after the company's third-quarter profit and revenue came in well above expectations.

The company's fourth-quarter net revenue, which excludes fees shared with partner websites, is expected to jump 32 percent to $8.4 billion, according to Thomson Reuters I/B/E/S. Analysts expect Google to report adjusted earnings per share of $10.49, compared with $8.75 in the year-ago period.

A big wildcard is Europe, which analysts estimate accounts for roughly 40 percent of Google's revenue. With the region grappling with a sovereign debt crisis and the resultant economic uncertainty, many analysts have stuck with conservative fourth-quarter estimates.

"Our checks were suggesting maybe a modest slowdown in growth versus Q3's growth rate" in Europe, said Aaron Kessler, an analyst at Raymond James. "There's some room for upside for Google if Europe comes in better than expected."

Apart from its mobile strategy, Wall Street will be keen to hear co-founder Page address a number of key longer-term questions on Thursday.

The company's spending growth rate is likely to come under scrutiny. Page, who took the reins as chief executive in April, has aggressively weeded the company of dozens of projects and products, including efforts in renewable energy and healthcare.

By eliminating non-essential projects, Page has sought to "put more wood" behind the key arrows in Google's quiver. The company has embarked on an acquisition and hiring spree to position itself to take advantage of key trends such as mobile computing and social networking.