According to the latest report from Merrill Lynch, authored by Lauren Fine, GOOG CFO George Reyes spoke at the Merrill Lynch investor conference and said:
"importantly, for the first time, Reyes did say that the law of large numbers will likely start to come into play."
If you are wondering what the law of large numbers means in the context of Google, here is a quote from GOOG CEO Eric Schmidt in a Washington Post story from May 13 2005.
"But there is something called the law of large numbers. Eventually, you run out of people. It is not possible to know when that will be."
It's no wonder GOOG is playing nice with China--it needs its people to fuel its growth.
Also from the Merrill Lynch report:
". . .the CFO did say that new products will likely soon contribute more materially to the company's growth. Google Base will soon be fully searchable; Wi-fi projects are simply test cases right now; GOOG did, however, say that a payment processing services is a natural extension of its current payment services with Video Store and advertiser services and the Publication Ads service will see more publishers signed on.
Investments Will Continue
As GOOG has historically said, it will continue to invest in its business. It has been hiring people at 50-60 people per week over the last couple years. Capex is also needed to keep up with capacity demands and as long as revenues continue to growth very well, they will continue to reinvest in the business. Capex is going towards both real estate and its technology infrastructure, of which much will go towards international expansion."
Merrill Lynch is neutral on the stock.