Google and Apple bring back Tech Leadership Clout

With e-ink around the country still fresh from Apple's (AAPL) very strong results, the fact remains the old school ink business is dying, it was Google (GOOG) ready to take the Market stage. Technology Sector leadership has remained vacant during the economic turbulence World Markets have taken but as two of Jim Cramer's once famous 4 Horsemen of Tech, these companies were ready to stake their claims not only to leadership but in-turn "recession-proof-ability".

Bearish attitudes towards consumer spending, global economics and market sentiment led analysts far astray when it comes to the growth engines that Apple and Google continue to be. Apple beat analyst estimates by a whopping $0.40/share ($1.78 vs. $1.38) and as Google's numbers cross the wire the non-GAAP measures had outdone analysts by $0.15/share ($5.10 vs $4.95). Much has been written on the web about yesterday's Apple results already but a recap of the WC Power Tech Fund Apple earnings preview can be found here. (Link)

As for Internet giant Google, the mood was more somber coming into this quarter in light of reports of slowness in advertising and that Google had let go 100 recruiters and shut down several products and services. But with $5.7Billion in total revenue and $4.22 Net Revenue (beating expectations by $100Million) the train is still very much on the rails.

The search advertising leader continues to grow with 18% year over year Revenue growth and 3% quarter over quarter growth. Most of this growth can be attributed to the growth in paid clicks which saw 18% year over year growth and 10% quarter over quarter growth. Much has been talked about this quarter that Google was introducing several money-making initiatives and shuttering money-losing ones. Google was experimenting by showing more paid ads per search, brought more ads to video-site YouTube, and showed ads on Google Finance, Google News and Image Search for the first time. These initiatives went around the blogosphere and came back again with two general sides to the thesis. Clearly split between the Bear and the Bull.

1. Google is looking to blow away Wall Street and show everyone who rules Internet Advertising
2. Google is really struggling and needs everything it can to meet numbers

With the highest Revenue quarter in its history Google clearly didn't have its mind on struggling to meet expectations. A company that praises long-term growth and doesn't provide guidance to Wall Street would seem far fetched to really be under the gun as described in point 2. With Google expanding its reach across in Internet in nearly all geographic areas and adding to its cash horde quarter after quarter it is much easier to be bullish from here on out, despite the uncertainty over macro-economics.

With a 2nd business model out there somewhere, Google is sharpening its focus on Search and Ads, Mobile and the Enterprise. With AdWords and AdSense, the Android mobile Operating System and Google Apps Premier being pushed harder, management thinks large scale growth is still very viable from several Revenue Streams.

One of the biggest areas of improvement for Google was prudence in Capital Expenditures, which is significantly down from quarters past. After years of free-wheelin' spending on infrastructure, given the downturn it certainly pleased Wall Street to see Google be more mature with its spending. Estimates have pegged Google's technological advantage over competitors as great as 2-3 times. The fat years of data center spending have given Google incredible scalability in its infrastructure and allows it to afford quarters of prudence when it comes to spending. Which can't hurt when it comes to the bottom line in trying times.

One of the biggest advantages and leadership qualities Apple and Google have in this space is the ability to generate cash. With Apple having added another $3.5Billion to its cash horde and Google generating Free Cash Flow of $1.75Billion this quarter, the war chest of these Horsemen stand at $28Billion and nearly $16Billion respectively. In an economic downturn the ability to be nimble and invest strategically is an extrodinary benefit, that Investors likely will not see for some time. However long term growth and continued success are a direct result of investment. Google's cash horde has certainly been more active with buys of YouTube and DoubleClick.

Apple and Google have shown an ability to invest strategically, with Google making the bigger direct splash in the acquisition space, but both companies, while inexplicity linked in the mindshare of Investors have once again jumped to the forefront of the Technology sector with very strong business results in a climate other companies have described as catastrophic. It is the firms commenting on strength of business and not weakness of environment where I want to be invested.

Disclosure: Author owns AAPL, GOOG