Google’s second quarter earnings disappointed Wall Street yesterday and sent its shares tumbling. The search giant blamed lower returns from managing its huge cash piles but analysts are also concerned the market leader in search advertising might augur a wider slowdown in online advertising.

Google itself said revenue growth from search ads was “positive” in every sector except for real estate, which was down by a small amount.

But the Street wasn’t convinced, perhaps because Microsoft also disappointed with its quarterly earnings citing “tough” economic conditions which impacted its software business and online ad sales.

As is well known Microsoft has been involved in on-off on-again buyout talks with Yahoo while Yahoo is separately flirting with the idea of a merger with Time Warner’s AOL unit. But just in case the AOL talks don’t work out for Yahoo, Reuters has learned that Yahoo is prepared to renew talks over News Corp’s Web properties, which include leading social networking site MySpace.

Keep an eye on:

• Rambler Media, owner of Russia’s Ramble Web portal has agreed to sell the Begun advertising agency to Google for $140 million (Reuters).
• Warner Bros is set to unleash an online series on Batman that it hopes will usher in a new kind of Web entertainment blending comic books and animation called “motion comics” (WSJ)
• EMI is hunting for a smaller New York headquarters for its North American recorded-music operation after completing a global cost-cutting initiative last month that eliminated some 2000 jobs world wide. (New York Post)

(Photo: Reuters)