Google reported revenues of $5.4 billion for 2008's second quarter, which after payments to Web publishers which carry Google-sold ads, comes to $3.9 billion, just $30 million ahead of Wall Street's expectations. Second-quarter revenues grew 39 percent over the same period last year and increased 3 percent from the first quarter of 2008. Google earned $1.25 billion in profits in the quarter, down from $1.31 billion in the first. In statement, CEO Eric Schmidt said "Strong international growth as well as sustained traffic increases on Google's web properties propelled us to another strong quarter, despite a more challenging economic environment." Wait — we thought Google was immune to such paltry outside influences. Guess not: Google operating expenses in the second quarter of 2008 included $810 million in payroll-related and facilities expenses, compared to $809 million in the first quarter of 2008, which means the company's made sure to clamp down on expenses. Live coverage of Google's second quarter 2008 earnings call, below.
1:36 — The canned music is off and we're starting with the disclaimers. 11-word version: Our lawyers say you can't hold us to anything we say.
1:38 — Schmidt's taken the line now. He's already talking about how well Google's doing in "uncertain" times. Which shouldn't be very impressive, because didn't these guys used to say the economy would have no effect on Google? Yes, they did.
1:41 — Schmidt is going on about Google's impressive international growth.
1:41 — Now Schmidt's talking about Google CFO Patrick Pichette. He's also going on about how much he'll miss former CFO George Reyes. What, that idiot?
1:44 — European growth was strong largely on automotive advertising growth, Reyes tells us.
1:44 — Reyes warns that traffic acquisitions costs are probably going to go up.
1:45 — 448 new employees came on, mostly in engineering, sales and marketing. Oh yeah, and a whole bunch of DoubleClickers. (Though not as many as there could have been).
1:46 — Operating cash remains strong at $1.77 billion. If you're curious. (In which case, you'd be better off looking at Google's press release.)
1:48 — Now we're listening to Google's chief economist, Hal Varian. He says that Google queries are strong, even in places where you'd expect them to be down — such as auto and home sales. Year over year auto ad spending is actually up, for example.
1:49 — Consumers are being cautious in their online spending. Advertising remains strong, however.
1:50 — Brin picks up the phone.
1:50 — He's telling us that Google's search index is much bigger now. Over 100 search quality improvements went through this quarter. "Roughly one a day." For example, now you can get blog results on the bottom of the search page.
1:52 — Brin says: "Many of you may use iGoogle, and we know that because we've seen such tremendous growth."
1:53 — Brin goes on: "If you're listening to me right now, you probably speak English. But if you're using Google translator to read this, you might not. Google translate now covers over 20 languages." Can you imagine taking a meeting with this guy?
1:55 — Brin says this without irony: "Most of you have probably had the chance to watch some YouTube videos by now."
1:56 — Now he's talking about mobile search.
1:57 — "One of the things I'm most excited to tell you about today is our progress with Apps. There are now more than a half million business using Apps. And that's just a tremendous number." Did you know that the government of Washington, D.C. uses Google Apps? That's 38,000 employees! "It's been a very exciting quarter for that." Indeed sir.
1:58 — What I love about Bring are his seques. Like this one: "We don't view Google Apps as a closed environment, by the way. We want to see more companies deploying cloud solutions. One of the things we've done to help that is the Google Appe engine."
2:00 — Now Brin's talking about the very successful app: Buddy Poking. "For those of you that like to poke." Proudly hosted on Google's App engine and available through Open Social.
2:01 — We're moving on to questions and answers.
2:01 — JP Morgan asks: UK growth seems to have decelerated. Why? Also: Will mobile search expand volume? What's the revenue impact going to be?
2:02 — UK deceleration is just typical seasonality — you'll see more of this now that we own most of the market share over there.
2:03 — Sergey answers the mobile question: "I think you'll see an uptick in volume because you always want to know something, but you aren't always on your computer to find it out."
2:05 — You've been lowering amount of ads served to increase quality. Will this lowering stop anytime soon?
2:05 — I don't see the focus on quality changing. We would just show one ad — the perfect ad — if we could.
2:08 — Goldman Sachs: If queries are down in a sector, do advertisers respond by bidding up to reach a smaller set of consumers?
2:09 — Hal Varian's answer: Sometimes, yes. When there's a scarcity of searchers, the cost to reach them sometimes increases.
2:10 — Schmidt: Culturally, YouTube is a far greater success than we ever-expected. On the revenue side, I personally do not believe the best ad product has been invented yet.
2:11 — With YouTube we're access advertisers like Footlocker, LionsGate, Lenovo
2:13 — How much did DoubleClick contribute to the quarter? How is Google changing the buying process in display?
2:13 — Schmidt: We're not going to break out DoubleClick numbers. The strategy is to develop a broad product line — for the large and small advertisers and publishers. Google: We're piecing together a highly fragmented market (and in the process killing all premiums everywhere! Yay!)
2:18 — Question about headcount. Schmidt responds: What you'll see going forward is prudent management of headcount growth. We're paying a lot of attention. We never want to misuse some of these talented employees.
2:20 — Question about YouTube. Schmidt: We're having a great deal of success with overlays. We're also having success with gadget ads. "When we find the holy grail, it's likely to very large due to the size and scale of YouTube," Schmidt says. Which plays right into Mark Cuban's claim that "YouTube has become the poster child for the old saying "we are losing money on every sale, but we will make it up in volume."
2:20 — A fifth all searches utilize some element of Universal Search. Yeah. The questions are getting boring.
2:34 — I just spared you about 14 minutes of blah. Grateful? We're done here.