Google (NSDQ: GOOG) CEO Eric Schmidt cautioned during the company’s earnings call Thursday that despite the company’s solid quarterly results, “we’re still basically in uncharted territory” when it comes to the economy. So far, he said, the benefits of the growing move toward online advertising had outweighed the negative impact of the economic slowdown on Google’s results. While revenue was down slightly compared to last quarter, it was up compared to a year ago. Schmidt also said that the next two quarters would be typically weaker due to seasonal trends.

Highlights from the call after the jump, including Schmidt’s comments on Twitter.

Twitter: Schmidt said that the service proved that “innovation is alive and well” in Silicon Valley. “Without commenting specifically about Twitter ... you could imagine that ... it could be a channel for product information, marketing information, real-time information for which you can hang advertising products, whether it’s a text ad or a video ad or so forth off of it ... It strikes me that’s a logical strategy for them to pursue and something that we would be very happy to pursue with them and all other players in that space.” Google has been rumored to be in discussions with Twitter about some sort of partnership.

Layoffs: CFO Patrick Pichette emphasized that even though the company was “unconventional,” it had been able to control its costs, in large part by reducing labor expenses, such as bonuses. The company also had three rounds of layoffs during the quarter.  Pichette said the company is still hiring but only in “critical areas.” The company’s workforce fell in size during the quarter, but Pichette said the company’s total employment number is now lower because of recent layoffs.

YouTube: Schmidt said that the company was making “very good progress” in linking up with studios. He said Google’s first priority was on the advertising side of the business, but that it expected to consider “micropayments” and “other forms of subscription models” as well.

Display ads: Jonathan Rosenberg, senior vice president of product management, said the company was dedicated to the display-ad business and would continue to invest heavily in it. The company is “very optimistic” about a new program to link display ads with the context of a page, he said, although “we don’t actually yet have deep insights on how that’s working in the field.”

Doubleclick: Rosenberg said that a year after its acquisition of Doubleclick, “we’re pretty well on our way to being fully integrated.”

Cash hoard: Schmidt said that the company would continue to be “very conservative” about its cash position. “I don’t think that will change any time soon,” he said.

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