Google’stock on Monday dropped to its lowest point in two years despite announcing last week the launch of the much-anticipated Android phone, which could give the search king about 4 percent of the U.S. market for smart phones.

By midday Monday, the search king’s stock was trading as low as $395.34, its lowest point since September 2006.

Analysts worry that the Internet giant, whose main source of revenue is advertising--AdWords is Google’s flagship advertising product and main source of revenue, $16.4 billion in 2007--will suffer form the general economic malaise.

“We believe the economic weakness, if it continues, will have to impact Google," wrote Jason Avilio, a Kaufman Bros analyst, in a note to client on Friday. "We are taking down our revenue estimates for the back half of 2008 and 2009."

Mr. Avilio lowered his revenue estimate for Google’s current third quarter from  to $4.03 billion from $4.7 billion and his profit estimate to $4.65 a share from $4.73 a share. For 2009, Mr. Avilio cut his revenue projections to $19 billion from $19.7 billion and his profit estimate  to $22.17 a share from $23.88 a share.

The reduced projections come less than a year after the Internet giant’s stock reached an all-time peak amid analysts’ predictions that the stock would reach a whopping $850.

The company’s stock had reached a record $747 last year in November after announcing (read story) the Android project--a free software platform and operating system for mobile devices based on Linux, which would be available to mobile carriers under the Apache free-software and open-source license.

But Google isn’t the only tech stock to suffer a gloomy Monday. Apple, another Silicon Valley giant, took a major beating with its stock, falling a record 18 percent by midday trading.

Fears about reduced spending on tech goods and gadgets along with Wall Street’s ongoing battle with a credit crunch and a controversial $700 billion federal bailout took a toll on an already waning market. The Nasdaq fell 4.8 percent to 2,078--its lowest level in more than two years.