On the conference call, Google maintains that foreign exchange rates had an inconsequential effect on sequential international growth. But then they went on to say that if FX rates had stayed the same from Q1 2005 to Q1 2006, international revenues would have been $65 million higher.
Having your cake and eating it too... FX rates can, do and will fluctuate. Trying to figure out and actually report what would have happened if the rates had not changed seems naive.
International businesses need to develop a truly global mentality when navigating FX rates and the fluctuations, and international business is of growing importance at Google. Given last year's/quarter's issues regarding allocation of costs and their impact on effective tax rates, one wonders if Google has a deep understanting of operating globally.
Perhaps a strategic hire from an international bank or major oil company is called for.