Google shares suspended after earnings release blunder
Google shares were suspended for more than two hours yesterday after an erroneous early release of its disappointing third quarter results shocked the market and sent the Internet giant's stock price tumbling.business Updated: Oct 19, 2012 08:52 IST
Google shares were suspended for more than two hours on Thursday after an erroneous early release of its disappointing third quarter results shocked the market and sent the Internet giant's stock price tumbling.
The figures were made public in a regulatory filing hours ahead of their scheduled publication, which Google called a "draft" released by a printer "without authorization."
The final version came a few hours later, with the same numbers but with a comment from chief executive Larry Page in place of a line on the draft which said, "Pending Larry Quote."
"We had a strong quarter," Page said in the statement.
But the numbers told a slightly different story.
Net profit was reported at $2.18 billion, down 20% from $2.73 billion in the same period a year ago.
Google stock slid 8.0% to end at $695, taking the company's market value back down below that of Microsoft, which it overtook earlier in October as the number two player in the tech sector behind Apple.
In a conference call, Page later apologized for the mistake.
"I am sorry for the scramble earlier today. As our printers have said, they hit send on the release just a bit early," he said.
Google said revenue including sales from its newly acquired Motorola Mobility unit amounted to $14.1 billion.
Google's own ad and other revenue rose 19% from a year ago to $11.53 billion.
Google's earnings per share adjusted for special items amounted to $9.03, far below Wall Street expectations of $10.65 per share.
Analysts were largely unfazed by the weak results.
"At first blush Google missed on the revenue and earnings per share lines, but a closer look suggests problems seem related to Motorola," said Brian Pitz and Brian Fitzgerald at Jefferies in a note to clients.
"Google core search seems healthy," they said, maintaining a price target of $850.
Independent tech analyst Jeff Kagan called the soft results "just a hiccup in Google's climb" and said the firm was still "on the growth side of the wave."
Anthony DiClemente at Barclays argued that "the sell-off presents a buying opportunity as we think the Street was overly optimistic going into the quarter and did not fully discount the potential Motorola drag on the business."
Google in May completed a $12.9 billion deal for Motorola Mobility, a key manufacturer of smartphones and other devices that put the Internet giant in head-to-head competition with Apple.
Google acquired 17,000 patents with the purchase of Motorola Mobility and has been strengthening its patent portfolio in the fight for dominance in the booming smartphone and tablet market.
Motorola Mobility was created in 2011 when US-based Motorola Inc. split the company into two separate entities: a mobile devices unit, and a government and public safety division known as Motorola Solutions.
Google remains dominant in its core area of online advertising with a 74.5 percent share of the US search ad market, according to data from eMarketer.
Google's ad revenue alone is expected to account for 41.3% of total US digital ad revenues in 2012, eMarketer projects.