Google stock was up yesterday, down this morning and everyone has an opinion for the yo-yo effect currently frustrating Google investors.

At the top of the list of issues is actually a projected issue – Google’s first quarter earnings which come out on Thursday. The sentiment is a downward one on Google earnings, with the stagnant economy finally catching up to Google and its decade of fairly unbelievable profit-taking.

There have been a lot of firsts for the Internet search giant this year. Its first round of layoffs occurred in March, with 340 heads on the proverbial chopping block. Company bean-counters have also embarked on a company-wide fat-cutting campaign, with many of Google’s famous employee perks going by the wayside. Google has also pointed its cost-cutting axe at its biggest profit center – paid Internet search – with reduced spending in that key area.

Now, could we actually see reduced quarterly earnings, when compared to the previous quarter? A lot of well-paid Wall Street analysts (yes, they still exist) seem to think so. Says the Associated Press this morning, “Google has been shaken badly enough that most analysts believe the first three months of the year will mark the first time that the Mountain View-based company's net revenue has declined from one quarter to the next. The revenue is still expected to up by 7 to 8 percent from the same time last year.”

“To combat the slowdown, Google has been showing more ads on its Web site, including in areas like its news service that hadn't previously displayed commercial messages. The expanded advertising has irritated some financially struggling newspaper publishers who have long believed Google unfairly profits from their content. Google contends it's helping out newspapers by driving more visitors to their Web sites.”

One big earner for Google is YouTube, which one analyst expects will see revenues of $300 million in 2009 and $1 billion (annually) by 2011. Rumors of a proposed merger of an undefined variety with Twitter has also perked up some ears on Wall Street. That would give Google access to a formerly cordoned-off market – text-messaging, especially on mobile devices.

There are some optimists out there. Youssef Squali, technology analyst at Jefferies says that the first quarter for Google will be “better than feared,” and projects $4.2 billion in revenues and profits of $5.24 a share. “Higher levels of consumer searches, marketers’ focus on performance-based channel and management’s greater emphasis on margin protection are all likely to show Google’s relative resilience amid the severe ad climate,” he writes. Squali is keeping his target price for Google stock at $450 per share.

Clearly, Google will survive whatever the economy throws at it. But there are some chinks in the armor and it will be interesting too what Google looks like when it emerges from its current financial shakeout - and who emerges alongside it.