Even Google Inc. (NASDAQ: GOOG) is feeling the economic pinch. Actually, what started as a pinch has turned into a train wreck, and now even the world's largest web search provider will be slowing hiring and turning down the heat on possible acquisitions. Google CEO Eric Schmidt told Bloomberg Television that advertising budgets are "under stress." I'd say that's an understatement.

In all likelihood, this will be Google's toughest test in its 10-year history. Its entire business revolves around advertising income. Although the company does it better than anyone -- and new media advertising is finally becoming mainstream -- the company's exposure to an ongoing slowdown could be cause for concern. Although the company may "do no evil," it will certainly have some profit evil creeping up on its results in some form soon.

Schmidt added that, "All of us are vulnerable . . . it's a race between a contraction in advertising, which would affect everybody, and a very positive shift from offline to online.'' The question is this: can Google take more of the dollars that are shifting to online advertising faster than the overall contraction in advertising spending over the next year or so (or longer)? Given Google's history, it will almost certainly continue to be successful, but it's hard to see the company taking such huge chunks of market share that the advertising slowdown won't chip away at its results.

Google Inc. (NASDAQ: GOOG) Chief Executive Eric Schmidt appears interested in joining Barack Obama's cabinet. He's not campaigning for the job, telling the Wall Street Journal that he was "too busy" running the world's largest search engine company.

Of course, anyone who wants a cabinet position never admits it. It's considered a faux pas. Schmidt, though, seems to be interested in making a difference beyond Google. He does not want to sit back on some deserted island counting his billions as he downs exotic frozen drinks.

The Journal, citing unnamed tech and media executives, speculated that Schmidt "might desire a role in an Obama administration, possibly the chief technology officer post Sen. Obama has said he would create." Exactly what that job would entail is not clear. It sounds like the type of job where Schmidt would sit in an office somewhere in the White House thinking grand thoughts and writing grand reports that would gather dust almost as soon as they were published.

Google, Inc. (NASDAQ: GOOG) CEO Eric Schmidt has sung the praises of many things in the past: consumer experience, mobile product offerings and even Google's philanthropic efforts. At the same time, Schmidt has made sure Google has evolved into a ruthless competitor that has really blindsided the internet marketplace in so many ways so fast that it caught most of us off-guard.

But can Google seriously save the world? Although tech pundits sometimes state that in tongue-in-cheek fashion, Schmidt is dead serious about it. Google's massive global infrastructure requires a ton of energy to operate. As we all know, energy costs are not exactly low. Although newer Google data center sites are chosen partly for cheap energy proximity, that's not enough. The company wants to fix the energy problem in the U.S., and they have a plan.

The Oracle of Omaha is shining a light on the presidential campaign of Barack Obama.

According to media reports, Warren Buffett is participating with Obama in a meeting about the economy along with Google Inc. (NASDAQ: GOOG) Chairman Eric Schmidt, former Treasury Secretaries Robert Rubin and Larry Summers and former Labor Secretary Bob Reich, according to CNBC. New Jersey Gov. Jon Corzine, a former Goldman Sachs Group Inc. (NYSE: GS) co-chairman, and former Federal Reserve Chairman Paul Volcker also will be at the meeting of the wisemen tomorrow. Buffett will be participating via telephone hook-up.

There is plenty to talk about given the current state of the economy and the housing market which the International Monetary Fund says shows no signs of recovery. Obama, the junior senator from Illinois, is clearly signaling not to expect much from the meeting.

``I expect some further fine-tuning of short-term policies based on what's happened over the last several months,'' Obama said in an interview with Bloomberg News.

What that means is not clear. It should surprise no one that Buffett is backing Obama. The investor has been critical of President Bush's economic policies including the repeal of the estate tax which he said would be a "terrible mistake." But that doesn't mean he agrees with all of Obama's policies either.

As CNBC notes, Buffett supported Hillary Clinton while she was running for president and disagrees with Obama's call to tax the windfall profits of oil companies and his decision to forgo public financing of his campaign. I guess the Omaha investor considers Obama to be a significant improvement over Republican John McCain.

Interesting how the greatest investor in history who Republicans tout as a champion of capitalism is as big of a Democrat as Barbra Streisand.

MAJOR PAPERS:

• Rick Wagoner, the CEO of General Motors Corporation (NYSE: GM), hit out against allegations that the auto maker may soon file for bankruptcy and said he believes the company's financial position will "remain robust" for the rest of the year. Wagoner also said, the Wall Street Journal reported, that the company has no plans to sell or reduce more of its brands.
• An independent Yahoo! Inc (NASDAQ: YHOO) would be better for the world, Google Inc (NASDAQ: GOOG) CEO Eric Schmidt said and the Financial Times reported. Yahoo! will be able to create more competition in the search market and other advertising markets if it stays independent, Schmidt contended.

OTHER PAPERS:

• According to people briefed on the plan, the New York Times reported that senior Bush administration officials are weighing a plan to have the government take over either Federal National Mortgage Association (NYSE: FNM), or Fannie Mae, or Federal Home Loan Mortgage Corporation (NYSE: FRE), or Freddie Mac -- or both -- and place them in a conservatorship if their problems continue or worsen.
• The New York Times also reported that people briefed on the matter said Anheuser-Busch Companies Inc (NYSE: BUD) is in active talks to sell itself to InBev in a friendly deal, despite previous hostility to the idea. One person said InBev indicated it may be willing to pay more than the $65 per share originally offered.

Google, Inc. (NASDAQ: GOOG) has been growing its employee count by leaps and bounds over the last few years, but has recently slowed that growth which, of course, sounded an investor alert. But, the world's largest internet search engine just can't keep track of the activities of all its new employees, according to CEO Eric Schmidt.

Google does not want new employees to get lost in the cracks, according to Schmidt. If this is true, then Google is growing too fast for its britches. "We have slowed our head count growth for a couple of reasons, but the biggest reason is it began to feel like we really didn't have a good sense of what people were doing ... the systems in the company, literally who's doing what, what are they doing, seemed to lag our ability to hire these great people," Schmidt told CNBC.

In the first quarter of 2008, Google upped its head count from 16,805 to 19,156. That's quite a bit in a single quarter. Even with all those new people, Google affords more luxuries on its employees than most other public companies in the world. Even with a recession in progress (if you agree with that), Google's business, so far, has been stellar. Schmidt indicated that "we have gross margins to afford it," in talking about the lavish treatment of Google employees and the benefits they receive. Will shareholders continue to like the way that money is being spent? So far, there have not been any complaints.

Frank Quattrone is a legend in tech dealmaking. He got his start in 1981 and has since worked for firms like Morgan Stanley (NYSE: MS), Deutsche Bank and Credit Suisse. Some of his deals include the public offerings of Netscape, Cisco Sytems, Inc. (NASDAQ: CSCO) and Amazon.com, Inc. (NASDAQ: AMZN).

Well, in March, he announced that he has put together a boutique investment bank, Qatalyst Group. His team has advised on more than 400 M&A deals and 350 financings.

Despite being out of the game for some time, Quattrone still has lots of brand power. Interestingly enough, he has already snagged a plum assignment. That is, he will represent Google's (NASDAQ: GOOG) CEO, Eric Schmidt, in the intricate battle between Yahoo! Inc. (NASDAQ: YHOO) and Microsoft Corporation (NASDAQ: MSFT). This is a according to a piece in the NYTimes.com.

OK, what will this mean for the fight? It's tough to tell. However, I'm sure Quattrone will devise something interesting. For example, there is already the beginnings of an advertising alliance between Google and Yahoo!

But whatever comes of things, I'm sure Quattrone will get a juicy fee -- and turbocharge his new firm.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

I guess things are tough all over -- even Google Inc. (NASDAQ: GOOG) is laying off people.

For the first time, the tech darling of the internet will be cutting a large number of jobs, with the reductions coming from the company's new DoubleClick workforce. Google completed its purchase DoubleClick on March 11, and it was widely expected that the Goog would fire some of DoubleClick's 1,500 employees. According to The New York Times, though, the 300 number is larger than expected.

Google is also planning on selling Performics Search Marketing, a unit of DoubleClick. Performics is a search engine marketing company that gets paid to place ads on search engines. This could interfere, or appear to interfere, with Google's objectivity when ranking -- and charging for -- page popularity. So bye bye Performics!

Google has about 17,000 employees worldwide, having added over 6,000 in 2007. CEO Eric Schmidt has promised to slow the pace of hiring in the coming months.

The New York Post reports on Corporate Leader magazine's poll of the top CEOs based on a survey of analysts and investors. Here's my assessment of the top five:

• Steve Jobs, Apple Inc. (NASDAQ: AAPL). With its stock up 94.4% in the last year -- though 13% below its 52-week high -- Apple's new products this year have been outstanding. But it's a pretty pricey stock; it trades at a Price/Earnings to Growth (PEG) ratio of 1.56 on a P/E ratio of 42.3 and Earnings Per Share (EPS) growth of 27.2% to $6.26 in fiscal 2009.
• Eric Schmidt, Google Inc. (NASDAQ: GOOG). With its stock up 27.8% in the last year -- though 15% below its 52-week high -- Google continues to take share from traditional advertisers while struggling somewhat to profit from all its innovations. But it's a somewhat pricey stock; it trades at a PEG ratio of 1.39 on a P/E ratio of 49.6 and EPS growth of 35.8% to $18.19 in 2008.

With Google, Inc. (NASDAQ: GOOG) shares at an all-time high (giving the search leader a ridiculous $200 billion market cap), the triumvirate leadership of founders Larry Page and Sergey Brin and CEO Eric Schmidt have set their collective eyes on yet another jumbo jet to cruise around the world in.

This situation sounds like 1999-era dot-com exuberance madness, but the market has pushed Google to insane levels and the company has billions of cash on hand for anything it needs, as in acquisitions, global computer server farms and huge jets.

In addition to the new jet purchased under the auspices of a company names H211, LLC, the three Google leader have scored an exclusive agreement for airport access at Moffett Field, including the rights for four planes in total. Moffett Field is very close to Google's Mountain View, California headquarters.

The current staple of planes owned and operated by Google's seemingly-eccentric leadership trio includes two Gulfstream Vs, a Boeing 767, and the new Boeing 757. Are other Silicon Valley CEOs jealous? Most likely, yes. But, at least the Google folks are buying 'green' credits to offset the jet fuel they'll be expunging. As a Google shareholder, do you think the company needs a small jet army like this?

Google Inc. (NASDAQ: GOOG) recently trading up $15.29 to $609.20.

GOOG is expected to report earnings per share (EPS) on October 18th. GOOG October at the money 580 straddle is priced at $32.10. GOOG October option implied volatility of 38 is above its 26-week average of 27 according to Track Data, suggesting larger risk.

The Gap Inc. (NYSE: GPS) CEO Glenn Murphy hosted a meeting with analysts on October 5th.

Smith Barney says "Mr. Murphy is focused on making the company gets an adequate return on its investments. This includes a focus on the expense of the business. We suspect there will be continued focus on moderating the cost structure and assessing various cost components, including marketing. We think the real estate portfolio is under review." GPS over all option implied volatility of 31 is near its 26-week average according to Track Data, suggesting flat price risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

In one of the first public attempts by Google Inc. (NASDAQ: GOOG) to give customers incredibly customized information, the web search leader is poised to build the strongest database yet of detailed human behavior. How does it do this? By storing web searches (and for news, video, etc.) and preferences for its customers. Then, it will take that information to build a model of each Google customer and use that expansive material to give customers advice on making important decisions about their own lives.

Google CEO Eric Schmidt was heard saying, "The goal is to enable Google users to ask questions such as 'What shall I do tomorrow?' and 'What job shall I take?'" -- and that says it all. Google's aim is to be the first artificially intelligent and global network that "knows" about its customers from every angle and can suggest things to them on a personal and custom scale. Is Google becoming the Skynet of the Terminator films? Hardly, but the goal of the company is to enable the most relevant information and render it when needed. Right now, that realm sits squarely in web search, but is expanding rapidly.

Google has already showed (profitably, I might add) that if it can engage the customer in a non-intrusive way and suggest things (advertisements) that fit the customer, then the customer will respond ... and respond ... and respond. Will customers care that Google has so much personal information on their online habits? If it helps those customers be more productive and eases the load on life because of an "information-available-anywhere" type of approach, perhaps not.

Yahoo! (NASDAQ: YHOO) and Google, Inc. (NASDAQ: GOOG) continue to turn up those collective noses every time the subject of "click fraud" comes up to bat. It's something all companies that bill ad partners for mouse clicks can't avoid, and the legions of unscrupulous hucksters who want to cost competitors marketing dollars for bogus clicks will not end any time soon. Google has made it a point of saying it has very sophisticated and proprietary systems to track the causes of click fraud and return ad spends to clients who believe they are victims.

Are paying customers satisfied with that promise? At an InterACT Conference today in San Francisco, a chief research scientist for Fair Isaac will say that 10% to 15% of clicks billed to Pay-Per-Click (PPC) advertisers that use Google, Yahoo!, Microsoft (NASDAQ: MSFT) and other Internet portals are the result of fraudulent traffic. Now, this will be an interesting statement to forensically dissect, as in "how does he know that?"

Google will most definitely hear from ad partners who continue to maintain that they lose millions of dollars to worthless clicks (clicks that result in no actionable intention from the clicker). As such, Google's constant battle with the actual methodology and motives of those reporting significant levels of click fraud will again be front and center here. Is Fair Isaac inflating its estimates with an ulterior motive in tow? Google probably thinks that, as Fair Isaac sees a new "fraud prevention" business model ripe for exploit here. Or, does it?

At the company's annual meeting, Google (NASDAQ: GOOG) CEO Eric Schmidt told reporters that while the company will certainly consider larger deals, its primary focus will be on building its portfolio through small acquisitions, and that it's focused on acquisitions as a way to build its own portfolio rather than a reaction to competitive pressures.

The company currently acquires about one start-up per week, and sees acquisitions as a way to add to its stable of engineers. It also ruled out entering the Dow Jones (NYSE: DJ) sweepstakes.

I like this strategy: Many a great company have been ruined by big acquisitions, and very few have been built that way. Of course there are exceptions, but a strong focus on core businesses and complementary acquisitions is probably the best way for Google to grow.

Google Inc. (NASDAQ: GOOG) reiterated what it has said for quite some time at its annual shareholders meeting yesterday: it isn't nearly as interested in large acquisitions (too late) as some think it is and likes buying small startup companies.

Add to that the propensity of Google management to want to "partner" with content sites on the web (and other places) instead of buying content companies, you've got the thrust of the meeting.

Google CEO Eric Schmidt said that recent large acquisitions from Google weren't done as a response to some competitive threat, but more to fill holes in Google's product portfolio. I think it's both -- Google is trying to compete better in the segments where it operates while establishing new advertising beachheads ("filling in product holes").

And no -- Google won't be buying Dow Jones & Co. (NYSE: DJ) or any other content company, according to Schmidt. Google co-founder Larry Page added to the discussion as well, and the general feel from Google's meeting for shareholders is that the company wants to partner with anyone who creates good content and who has an audience or can build one.

What does partnering solve for Google? Well, it lets the company sell advertising across every partnership and become -- as I've said many times before -- the largest advertising network the world has ever seen. And, Google will get a cut of every ad viewed, listened to or clicked on.