The Numbers Are In

Does this company just print money out of the back of its office or something? Once again, Google (GOOG) beat Wall Street expectations and turned in better numbers than investors and analysts expected. Going into yesterday's quarterly announcement, Wall Street thought Google's revenue would rise 2.3 percent from the same period a year ago. In fact, Google boosted its revenue to $5.52 billion, a jump of 3 percent. The same can be said with the company's earnings; Wall Street had it pegged at $5.08 a share, but Google topped out at $5.36 a share.

In addition, as Silicon Alley Insider's Nicholas Carlson details, Google may have finally hit upon a way to make YouTube actually turn a profit. YouTube has been posting more and more "premium" videos, or professionally produced movies and TV clips, with extended ads bundled in the films. In fact, the number of viewings of such clips—"monetized views," in the industry's disconcerting jargon—tripled last year. That, combined with Google's strategy to lower costs by buying bandwidth in bulk, could eventually put the service in the black.

So why did investors punish Google in after-hours trading? According to New York Times reporter Miguel Helft, Google's stock actually dropped three percent following the announcement. Helft has a theory: After Intel (INTC) announced particularly strong quarterly numbers a few days ago, investors were looking for signs that the economy had turned the corner and was zooming back toward the gravy train. Instead, Google's numbers merely indicated that the worst was probably over. Since Google is the world's largest ad machine, its health indicates how willing companies are to spend and invest money, which is a fairly accurate barometer for the economy as a whole. With yesterday's results, Google has possibly shown us what the bottom of the recession looks like.