In its earnings report and conference call with investors, Google (NSDQ: GOOG) boasted of its Q4 performance and essentially pinned the blame for its first-ever profit decline on $1.09 billion on writedowns related to AOL (NYSE: TWX) and Clearwire (NSDQ: CLWR). In the case of Google and AOL, the search giant took a $726 million impairment charge on the $1 billion investment it made in the Time Warner unit back in 2005. As MediaMemo’s Peter Kafka points out, when Google received its 5 percent stake in AOL about three years ago, it was investing in a company valued at $20 billion. Considering the roughly 73 percent difference between then and now, that means Google considers AOL’s worth to be only $5.5 billion.

For Google’s purposes, this is really a technical matter since these are only paper losses and the company wasn’t looking to make an investment score. But Google’s judgment only serves to completely dash Time Warner CEO Jeff Bewkes’ reported recent hopes to sell AOL for $7 billion. In any case, as Time Warner CFO John Martin told a recent investment conference, this isn’t the best time for such deals.

In other Google news, the company recorded a $355 million impairment charge in its Clearwire investment. Full details on this at our sister site mocoNews.net.

Staci adds: That investment was one of the keys to Google winning the AOL search race over Microsoft (NSDQ: MSFT) back in late 2005. By paying $1 billion for 5 percent of AOL, the company helped Time Warner set the unit’s value at $20 billion.

• Earnings Call: Google’s Schmidt: ‘We All Had It Easy In Q4’; Profit Hit By Writedowns
• Earnings: Google Q4 Profits Plummet 70 Percent; But Still Beats Estimates
• Google Writes Down Clearwire Investment By $355 Million
• AOL-Google: The Deal As Non-Deal