Google recently announced that its revenues were up by 58 percent. For any other company, that would be good news. But this is Google we’re talking about, where only the fantastic will ever be good enough.

Google’s news came only two days after Yahoo announced a quarterly earnings drop, which adds some perspective to the reaction.

The search company’s performance again centred on to strong search advertising sales, in which Google’s revenue reached $3.87bn in the second quarter, up from $2.46bn in the same quarter last year. Net profits hit $925m, up from $721m.

CEO Eric Schmidt, during a meeting with analysts said, “We’ve delivered strong revenue performance, particularly on core Google.com search, and strong cash flow in our seasonally weak quarter. Traffic is stronger at Google.com, both domestically and internationally, with annual traffic growth actually increasing over time.”

Revenues from Google.com alone hit $2.5bn, representing year-on-year growth of 74 percent.

Revenues from AdSense — the ad network for third-party web sites — grew 36 percent over last year, to $1.35bn.

Schmidt continued, “The summer seasonality that we always talk about does appear to be milder than we expected, and we’re improving our ability to monetize searches, as we do every quarter.”

CFO George Reyes commented, “Spain, Italy, and France in particular outperformed in Q2, while Germany, along with the UK, were significant drivers of revenue growth.”

UK revenues were $600m, a 4 percent increase.

Overall, operating income dropped to $1.1bn, and there was a 7.12 percent drop in Google’s stock price in after hours trading.

In an interesting piece of soothsaying, Jason Calacanis, the “formerly” man par excellence, predicts that Google will release not only a cheap PC in 2007, but also an operating system.

“He [Eric Schmidt, Google’s CEO] also told me they would never do a OS or a PC. Well, Dell is bundling Google apps with their PCs now, and I predict that in 2007 Google will release an Operating System and a super discount PC. Think, a $300-400 PC all-in-on unit that is sold at cost in order to make money off of their services.”

In a further chilling message for Microsoft, he says, “The next upgrade cycle for Office is dead in the water thanks to the Google Office suite.”

Scary.

The dotcom crash of 2001 is a spectre that haunts anyone who makes their living on the internet. Those who work around what’s often called Web 2.0 are particularly sensitive about it because if another online slump materializes, that’s where it will strike.

But what will be the harbinger of a Web 2.0 crash? According to Dave Winer, that grand oldish man of blogs, RSS and OPML outliners, it will be signalled by the busting of Google.

… today we got the first rumblings of the shock that will signal the end of the bubble. Google stock will crash. That’s how we’ll know.

When I realized this, I should have known, because I’ve been saying for almost a year that Web 2.0 is nothing more than an aftermarket for Google. Startups slicing little bits of Google’s P/E ratio, acting as sales reps for Google ads, and getting great multiples for the revenue they generate by fostering the creation of new UGC to place ads on. When Google crashes, that’s the end of that, no more wave to ride, no more aftermarket, Bubble Burst 2.0. And the flip of this is also true — as long as Google’s stock stays up, no bubble burst.

Currently Google stock is riding high around $500 and forecast to go to $600 within a year. But stranger things have happened.

Now we hear this : “Google shares, which topped a milestone price of $500 a share last week, are overvalued and poised to fall, says Barron’s financial newspaper.

New.com reports : “Barron’s said Google is overvalued because it trades at 37 times next year’s expected earnings and because its growth rate is slowing.”

Is the bell already tolling for Google and Web 2.0?

Google shares have topped the $500 mark despite analysts scepticism, reports The New York Times.

“I thought the stock was a little expensive,” said Mark Mahaney, an analyst for American Technology Research and now for Citigroup said. “It turns out that was a terrible call.”

With forecasts of a $600 share price within a year, the Google fairy tale continues.

So by the beginning of last year, Mr. Mahaney jumped on the Google bandwagon. And so have most of Wall Street’s analysts, along with the portfolio managers who look after big pension and mutual funds.

Today, Google’s shares gained $14.60, or 3 percent to close at $509.65, passing the $500 mark for the first time. (Mr. Mahaney, whose sell recommendation came at $137, is now among those predicting that it will rise to $600 within a year.)

It has also been reported that Google is now worth half of Microsoft’s share cap, an astonishing rate of growth for an eight-year-old company.