• TechCrunch, Tuesday, April 14, 2009 11:30 AM

The consensus on Wall Street is that search giant Google had a rough first quarter. Yesterday, J.P. Morgan analyst Imran Khan put out a research note predicting that revenues would actually decline 2% from 2008, and 13% from last quarter. His previous estimate was for growth of 5%.

So what sparked such a massive revision? For starters, comScore is showing declines in U.S. query volume, and various reports from search engine marketers including Khan's own contacts lead him to believe that commercial-oriented searches took a big hit during the quarter. So far in this recession, search has remained the healthiest segment of the online advertising industry, if not the advertising industry as a whole, and TechCrunch's Erick Schonfeld notes that while growth has slowed down considerably, the sector has yet to see any actual declines. Could this be Google's first down quarter ever?

"It is certainly acting that way," Schonfeld says, "cutting temporary workers and even a few hundred full time staff, and killing projects left and right." Khan thinks the cuts could save Google $450 million this year alone. He also thinks the generally weak economic climate will result in 20% of Google's advertisers cutting back on their SEM spending.

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