Google Could Catch a Cold From the Economy

Lindsay noted that much of Google's earnings miss was rooted in non-operational factors, including the first-quarter closing of its deal with DoubleClick for $3.24 billion, which took down cash and marketable securities, resulting in a reduction of the company's interest income by 34 cents a share.

He further pointed to Google's general and administrative expenses, which grew by an unusually large 58% over last year because of the company's involvement in a lawsuit with Viacom(VIA Quote).

Viacom sued Google last year for $1 billion, accusing it of allowing users to post more than 160,000 unauthorized clips on the site. The case is still pending.

Google also saw slowing revenue growth of its network partner sites, which was up 22% over last year in the same period but down 2% from the first quarter. Comparatively, revenue from Google-owned sites was up 42% over last year in the same period and up 4% over the first quarter.

"We think that this differential confirms our thesis that paid search on Google's own AdWords system is highly recession-resistant but Google's advertising network that serves text and now display ads on network partner sites is feeling the impact of the slowing macro-environment significantly more," Lindsay wrote.

Paid clicks, or the number of times users click on ads, were also cause for concern. They grew by only 19% in the second quarter over a year ago in the same period, and declined by 1% over the first quarter - marking their lowest growth level ever.