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Takeaways from Google's earnings call

Growth: 39% YoY revenue growth on a ~$20b base, in a slowing global economy is impressive. Hats off to Google. Lots of network effects at work as Google sites revenue grew 42% YoY.

Tone: I did note the slightest whif of humility this quarter that external factors had some effect on Google's business, in stark contrast to last quarter's more bold statement that Google saw no effect of the external market or economy on Google's business.  

DoubleClick: As I suspected, CEO Schmidt said in an answer to a question, that Doubleclick was going well but that he would not break out any information -- in Google's well-established sorry-Charlie-style... no insight or guidance for you... The only thing interesting that was said about DoubleClick was indirect, in that Sergey Brin said that the big problem in display is that it is highly-fragmented." Couple that with CEO Schmidt indicating that Google was only months away fom offering a one-stop advertising solution, one can surmise that Doubleclick will indeed prove to be a material growth kicker to help Google fight off some of the natural drag of the law of large numbers.  

Mention most worth follow-up: In Q&A my ears perked up when the CFO explained part of a cost jump was "legal costs" and CEO Schmidt chimed in that these costs were "bursty." I am amazed that a $20b company that gives minimal detail would mention that legal costs were a factor. Do you know how unusually big a legal number has to be to pop up in an earnings call? Did they settle some case that we don't know about? or is the Viacom-Youtube discovery work a lot more costly than Google has let on? Something is amiss and worthy of followup.   

Funniest comment: Some unidentified  Googler near the end of the call disclosed that Google has a new theme of "accountability." I had to chuckle and roll my eyes given all that I have written about how Google is basically accountable to noone.

  • I can only guess ... Maybe Google management is instituting some adult supervision or egads some internal controls or review processes... Maybe the One-Sentence-Manager was not enough accountability...

Oddest Development: One thing that was odd was that CEO Schmidt said in his opening remarks that Google's chief economist Hal Varian was included in the call to discuss the macro environment and to explain the auction process that many people had questions about. Mr. Varian addressed the macro but never got around to giving us any more insight into auctions... hmmmmm. It remains as opaque a black box, non-open process as it was before. Why tease and set it up so prominently... and then not discuss... weird.