A few months ago Sequoia Capital doused the ever ebullient Silicon Valley with a bucket of ice cold reality when it laid “good times” to rest. Today, one of Sequoia’s all time stars laid a big wreath on that grave in the pages of The Wall Street Journal. Google. And while it didn’t implicitly state that it might face tough times next year, comments by its CEO amount to a proverbial bear call which could mean bad news now only for Google but also for rest of the media and advertising sector.

“We have to behave as though we don’t know what’s going to happen,” Google Chief Executive Eric Schmidt told the Wall Street Journal. It seems like a prudent move. But I see it as a big red flag and I think Schmidt is preparing us for what could be a terrible 2009. The WSJ says that Google executives have been preparing for slower growth for a year but “the economic crisis is forcing them to step up their efforts.”

According to conventional wisdom (and investors) Google is the best positioned company to survive and perhaps thrive in the current advertising slump. If the leader of the pack is feigning ignorance about its chances, what can one say about mere mortals.

I find it hard to believe that a company that keeps world famous economist like Hal Varian (who muses on economy and Google’s prospects often on the investor calls), doesn’t know. As a company Google collects enough data on a daily basis that it can take a fair pulse of the broader economy. Remember, they could accurately track the spread of flu across America just based on searches, so why can’t the track the economic-sentiment? Additionally it sells ads to everyone from mom-and-pop shops to consumer durable giants and it has a fair idea on the degree of tightness people are holding their billfolds. They have enough intellectual horsepower on campus to put two-and-two together.

Beyond Schmidt’s statement, one has to look at their other moves such as plans to slash 10,000 or so of their contractors, slowing cap-ex investments and killing off projects. These point to tough times for the company that has lived a lush life so far.

Projects that are too pie-in-the-sky are going to be killed. Schmidt calls it the “dark matter.” Google Lively and Google SearchMash are two of the many projects, which will soon not matter. Google is contemplating killing of Google Notebook and Google Audio Indexing as well. Google Page Creator has given way to Google Sites. In that vein, Google is going to prune overlapping products. No more the 20-percent time for pet projects for engineers, though it might come back once the economic wheel churns. These are smart and prudent moves even if they are prompted by desperate need to control costs and meet their numbers.

I know it might sound hokey but rich don’t stop driving their Aston Martins just because the price of gas is going up. They do so when they are not as rich! The same analogy holds for Google and its cost cutting efforts. Just remember how much of PR they milked out of their 20-percent philosophy. They are essentially eating a cow-pie on that. They wouldn’t be doing this unless things are really really and REALLY tough.

Google needs to keep its sales machine going at a time when it is facing the same malaise as that of broader market – slowing spending on marketing and advertising. There is some argument that Google is going to win because of their performance-based advertising system.

While that is true to some extent but what happens when the economy goes into a deep freeze? If you don’t have money to splurge on a large screen Plasma TV, there is little chance you are going to search for that, and fewer the opportunities for Google to sell more ads against those searches. Of course, if there is no intent to buy amongst the searchers, then there is less inclination to click on those ads as well. And that is not good news for Google.

Google, of course is going to try and meet its targets by taking more out of the pocket of its “adsense” partners and undercutting competitors. WSJ points out that the company is focusing heavily on display, mobile and other ad-opportunities, which can only mean bad news for their rivals.

Related: Why Silicon Valley Should be Worried

First of all, I apologize for asking you guys this, since I’m not an active member of the forum. But, I wasn’t really certain on the best place, and I know Trunks0, who is quite fond of the forum, so I figured I’d ask you guys first. In fact, I’d usually go straight to him for this stuff, but he’s been busy as of late, and I don’t want to bother him. (though he will be referred to here)

I’ve been debating on getting a new computer for a while now, but I just can’t decide, and I’m horrendous at following hardware news. Obviously, the longer I wait, the cheaper parts will get. But that’s the problem…

What I’m wondering, is at this moment, would it be reasonable to aim for $800-1000 gaming PC, or are there expected drops in these components say, 3 months from now, that would warrant me getting them then. I’m terrible at explaining, so simply analogy as to what I’m getting at is my current rig has an s939 in it, that wasn’t that good to begin with. Only a few months after getting that processor was it killed off, making an upgrade all but impossible (foolishly expensive). I’d prefer to not have this happen to me again.

That being said, I have little prejudices as to who the hardware manufacture is. Any info to come to a concise conclusion would be great, and perhaps suggestions on the hardware direction to take would be helpful, so I can get a better grasp on this. Thanks for taking the time to read this.

In the latest Radio Berkman podcast, Prof. Charles Nesson and Joel Tennenbaum explain their countersuit against the RIAA, claiming that the RIAA should be forbidden on Constitutional grounds from suing people for sharing music files. Charlie’s analogy is to Congress passing a law that charges $750-$150,000 for each mile we go over the speed limit, and then allows a private company to fund itself by enforcing the law, and allows them to take bribes (”settlements”). He says the RIAA is using the federal courts as a collection agency. If the law is a criminal statute, which Charlie argues it in effect is, then private parties should not be able to pursue civil suits to enforce it.

If Charlie and Joel win, it would shut down the RIAA’s hyper-aggressive tactics. And, although Charlie does not say this, it seems to me that it might open up some interesting class action suits from those who have had to pay up.[Tags: podcasts radio_berkman charlie_nesson charles_nesson joel_tennenbaum riaa copyright copyleft ]