Good Morning Silicon Valley

In a clever plan to dampen irrational exuberance, Google managed to throttle down its quarterly performance just enough to come in below market expectations for only the second time in its existence. Yesterday, the search sovereign announced a second-quarter profit of a mere $925 million, or $2.93 per share, about a dime under predictions. Taken in by the tactic, some investors scattered like birds spooked out of a tree, taking the stock down about 5 percent at midday.

But the veterans in the trenches didn’t get overly excited. “The company spent too much, as they said they might some day,” said Jordan Rohan, an analyst with RBC Capital Markets. “It wasn’t a bad quarter. It was a quarter where the analysts’ models need to be reset at a slightly lower level of profitability, and that hadn’t happened in a while.” And Anders Bylund, an analyst with The Motley Fool, said, “If I wasn’t prohibited in trading in the stock, I would see this as a buying opportunity.”

One area where Google execs acknowledged they need to exercise some self control is their appetite for brains. At the start of the year, the company had about 10,000 employees; now it’s pushing 14,000. “We overspent against our own plan in the area of headcount, and some of it was … because we hired a little faster than we had planned,” said CEO Eric Schmidt in Thursday’s conference call. “In looking at it we thought, was this a mistake or not? We decided it was not a mistake, that in fact the kind of people we brought in are so good that we’re happy we did this. As I said earlier, we will continue to watch this very carefully in the future.”