Google beats, but drops after-hours.

Mighty Internet and search Titan Google (GOOG) posted quarterly earnings for Q1 2010 and the stock was met with a 3% sell off in after hours trading. Google has been moving higher with the Technology Sector throughout the last week, moving 5% higher in 5 trading sessions to close today at $595/share. With options traders glaring at tomorrow's expiry date, Google's typically high expectations during earnings, and its typically low-brow approach to reporting them, lead traders to some volatile and erratic activity.

So what was in store for Google's Q1? The US is starting to create jobs again, the economy is back growing, and even retail numbers have been looking good, smells like recovery to this writer, and most recently, even to Jim Cramer! Google was expected to earn $6.56/share on a Non-GAAP basis, which would've represented a 27% growth rate on a year over year basis ($5.16 in Q1 2009). As for total numbers, Revenue expectations were for $4.93 Billion and Income went for $2.7Billion according to analysts on the street.

Google's Non-GAAP earnings came in at $6.76/share, $0.20 higher than expectations, representing 31% growth year over year. Revenue and Income were marginally ahead as well at $5.06 Billion and $2.78 Billion. Representing estimate beats of 3% on EPS, 2.6% on Revenue and 3% on Income. Not exactly setting the barn on fire! Or is it that analysts are starting to get the steady climb of Google's one stop shop money printing business? It's a bit of both you see, Google has yet to find another product or service that generates enough meaningful Revenue and Income to truly surprise analysts now and with the background checking done by Wall Street at Search Engine Marketing firms and a wealth of advertisers things are proving easier to predict and a good barometer of quarterly performance.

In the past, estimates would creep up over the 60 days period to something reasonable and then Google would have a chance to show case its money making prowess, but this quarter estimates 60 days ago were already at $6.50 according to Yahoo Finance. Until Google hits another Revenue home run, and maybe YouTube will be it someday, Analysts wont have too hard a time charting the growth trajectory. Which is why Google's stock has been hit 3% on this modest earnings beat.

Investors should spend some time looking at the cash generation abilities of this company and its grand scale future plans, moreso than a quarterly statement. Generating $2.5 Billion in Cash Flow over the Christmas quarter, Google has followed that up by generating $2.3 Billion in Cash Flow for its Q1 of this year. The fact that this Advertising behemoth is on pace to generate $10 Billion in cash this year through simple text links (mostly) is a remarkable business study, and one the next generation of web properties are trying to get in on quickly (read: Facebook & Twitter). And with a cash horde of $27 Billion, Google has plenty in the bank for any sort of Thor type thunder that might near it--Marvel fans.

Google's forays into other businesses thus far have paid little fruit comparatively but the growth rate in Revenue tells an interesting story. Total Revenue has grown 30% in the last two years at Google, while the category of "Other", which includes Google Apps, Licensing and all the various side projects that aren't advertising have grown from $100 Million to $300 Million (a rate of 200%). It is this kind of growth trajectory that will get Analyst attention in the coming quarters if Google continues to push products and services in other genres than Search.

Google investors were fine before this quarter and they'll be just fine after it. Google is absolutely a company with long term vision, that is now settled in a mature (but rapidly evolving) multimedia advertising business. The ubiquitous nature of the Internet and its availability on phones, pads and all else under the sun, puts the Google brand front and center in people's lives. With that placement and clout, comes the assumption that the cloud is the future of computing, complete privacy is a long gone myth, advertising means the same as subsidy and the fact that the ad becomes a necessity for the convenience and convergence of a connected world. If that's believed, Google's one of the best future-proof investments to have.

Disclosure: Author owns GOOG.