After reporting Q3 earnings that beat analysts’ estimates, Google’s conference call began with CEO Eric Schmidt noting that new CFO Patrick Pichette, who signed on this summer, joined at an interesting time. Search, Google’s (NSDQ: GOOG) core, is where the company will put a lot of its investment and will add more personalization and tools to help advertisers manage their ad budgets. YouTube is now running ads with 90 percent of its partners. The integration with DoubleClick will bring more targeting for display, but the focus will be on keeping costs down. Schmidt concluded his opening remarks saying that while the macro-economy looks bad, he remains optimistic about Google’s ability to keep growing.

—After Pichette ran through the highlights of Q3— revenues up 31 percent to $5.54 billion year-over-year, and net income of $1.56 billion (earnings per share of $4.92)—co-founder Sergey Brin was up to discuss some of the new features Google has on the tech front, including constant improvement on the ratings of landing pages designed to elevate search quality. “We continue to blend more of our books, videos into more of our search results. Especially powerful, especially when you think of video. It’s a great reference tool, though most people still don’t think to look for videos when they’re searching for information.” He also provided an overview of news about the AdSense for Games, YouTube’s affiliate sales agreements, placing full-length episodes of CBS (NYSE: CBS) videos on YouTube, the coming launch of the Android mobile phone operating system and the Chrome browser. Of the latter, Brin said, “We hope it raises the bar for all browsers, as we want our services to run at their best on all of them.

—During the Q&A, JP Morgan’s Imran Khan asked Schmidt about what kind of business trends the company is seeing in October. “We see fluctuations and it’s complex. It varies by country and by region, however.”  Google’s Chief Economist Hal Varian then stepped in to offer some color, and said with a once in lifetime event, like the financial market meltdown—at least we hope it’s once in a lifetime—it’s just hard to predict what’s going to happen at this point.” More from the call, including link to transcript, after the jump.

—Cost Cutting: Pichette said that operating efficiencies and cost containment measures have been in place for a few months. But Google will continue to look for strategic investments to grow the business. “That’s the balance we’re trying to strike,” he said.

—Fixing the display market: Brin: “There are a lot of opportunities in display. When we started with AdWords, it took us a number of years to catch up. We could see the same with display. We’re concentrating on targeting and the return. Instead of a click, it might just be creating awareness and we have great tools for measuring that. But it will take a while until we fully develop it.”

—On Yahoo/Google: Schmidt was asked for his reaction to “the vitriol” on the part of some in the ad community to the search ad pact with Yahoo (NSDQ: YHOO), which has since been put on hold while discussions with the Department of Justice on avoiding antitrust issues continue. Schmidt was also asked how he felt about the government “meddling” in its business. Schmidt: “I’ll let you use the phrase ‘meddling.’ For my part, we knew that our competitors would oppose it and fight it vigorously. We anticipated a four month delay. With advertisers, we’ve seen a balanced reaction. The negative comments are coming from people who don’t understand how auctions work. Varian adds: “We’re trying to communicate better how the deal would work. Even people who were using AdSense didn’t fully understand. We’re dealing with that now.”

—As I was listening to the call, I traded emails with Mark May, an analyst at Needham & Co., who noted that he wasn’t surprised that Google’s stock was trading up over $20 in after-market trading. “The key driver for strong results in my view are i) strong search query growth (18% YoY), ii) UK market doing better than feared, iii) meaningfully lower spending levels, both in terms of hiring (unseasonally low hiring for a 3Q) and significantly lower capex ($452MM vs est of $820MM); and iv) ability to offset negative impact of strong dollar w/ currency hedging.”

Transcript (via SeekingAlpha)

• Earnings: Google Comes In Higher Than Expected After All; Revenue, Income Up