Is Tech Back? Nah.

I'm sure many are jumping up and down over Google's latest earning report. CEO Eric Schmidt said that "the worst of the recession is behind us." Call me skeptical, or even cynical, but I don't see anything yet suggesting that all is well. In fact, look at the current evidence from IBM, Nokia, and Intel and I think it suggests that things are still incredibly shaky, no matter where a willing suspension of disbelief has driven the Dow.

Start with Google's numbers, which blew past analyst average expectations by $0.47 per share. Good, right? Well ... maybe. Except just as was the case with Intel's earnings announcement this week, when results outpace analysts by that much, one of two things have happened. Either the company was wildly off in its estimations of what was happening -- and that is a sign that management doesn't know what is going on -- or the analysts and investors have been sandbagged. And as a savvy investor and tech sector watcher I know said to me today, when they're management expectations to create an impact on the market, it's eventually going to catch up to them.

In the first nine months of this year, Google did about $16.98 billion, which compares to $16.09 billion for the same period in 2008. That's a 5.5 percent increase. Hold that number for a moment and consider that the third quarter, ending in September, was a year-over-year increase of 7 percent. So, that means things are getting much better as Schmidt said, right? After all, that's healthy growth given the economy, right? Not so fast.

Last year in this period, Google reported a 34 percent year-over-year increase in net revenue. And the entire market went into a pit afterward, so a 7 percent increase just doesn't seem like so much. Factor in that Google continues to grow its search share, include how much broadcast and print advertising have dropped, and this starts to seem like an inconsequential increase that is likely a shift of some spending, but not real growth if you look at the entire advertising industry. Because that's exactly what 96.6 percent of Google revenue is: advertising. That's not a good sign for the overall economy, on which tech rests.

Oh, and for those who see Google as the future of licensing office productivity software, licensing and other revenues actually dropped in the third quarter, although it was up in the first six months of the year. It means that the trend of revenue diversification -- really so small a factor as to be nearly a rounding effort -- is far from being truly established.

So where's the other good news? IBM? The headline, handed to the press by the company, was earnings grow 14 percent and outlook is raised. But look at the numbers and you see year-over-year first nine month revenue down by 10.6 percent. Gross profit for the same period is off by 6.4 percent. Growing earnings when revenue drops means that the company is cutting enough to more than offset the situation. But it's hardly good news when you look at it that way. Nokia saw a 20 percent slump in sales and it actually lost money for the first time since 2000.

Although many are grasping at whatever straws of optimism they can find, looking to the sunny side of the street can leave companies turned away from the dark alleys when they most need to be on guard.

Image via stock.xchng user hedwig, site standard license.