Google panic over results bungle - FT.com
Last updated:
October 19, 2012 12:25 am
Google panic over results bungle
Disappointing third-quarter earnings from Google
were accidentally published several hours earlier than planned,
sparking a panicked sell-off of the internet company’s shares until
trading was halted for more than two hours.
Stunned investors wound up sending Google shares 8 per cent lower on the day as it missed earnings forecasts by more than a dollar, reflecting a continued fall in advertising prices and costs associated with its acquisition of Motorola Mobility.
Such
missteps used to be rare for the fast-growing technology company, but
Thursday’s results marked 2012’s second such disappointment. January’s
earnings report also sent Google’s stock down by 8 per cent.
Speaking to analysts after the market closed on Thursday, Larry Page, chief executive, said: “I’m sorry for the scramble earlier today. Our printers said they pressed send on the release a bit early.” The tech group asked Nasdaq to halt trading in its stock while the company worked to “finalise the document”.
The premature release of Google’s balance sheet and results, alongside an incomplete press statement that was marked as “pending Larry quote”, referring to Mr Page, appeared on the SEC website around midday New York time. The company was not scheduled to report until after the market close.
Google shares fell as much as 10 per cent to $676 before trading was halted. Their partial recovery to $695 when trading resumed at 3.20pm in New York still wiped out half the price gain for the year to date and took the group’s market capitalisation below that of Microsoft.
Shares in RR Donnelley, Google’s financial printer, fell almost 6 per cent after the Google statement, but later recovered most of their losses to close 0.9 per cent lower at $10.76.
Google’s consolidated revenues grew 45 per cent to $14.1bn for the quarter ended September 30. Net income fell 20 per cent to $2.18bn. Earnings of $9.03 per share were below analysts’ expectations of about $10.60.
The average cost-per-click of an advertisement fell about 15 per cent from the third quarter of 2011. Analysts at Citigroup had expected a year-on-year fall of about 11 per cent.
Mr Page, who has been absent from public appearances in recent months due to a mystery illness affecting his ability to speak, said: “As you can still hear my voice is still hoarse so I’ll keep these comments brief.”
During his 10-minute overview he revealed that annualised run-rate revenue from mobile devices reached $8bn, including advertising and the Google Play content store, up from $2.5bn in mobile ads alone a year ago.
Google
is showing results from heavy investments in areas beyond search, with
notable inroads in the mobile, video and display markets
The figures are the first full quarter since Google’s $12.5bn acquisition of Motorola Mobility closed.
Amortisation expenses of $317m, much higher than expected, contributed
an estimated 40 cents of the earnings shortfall, Citigroup estimated,
while Motorola’s operating loss of $151m far exceeded the broker’s $28m
forecast.
Anthony DiClemente, internet analyst at Barclays, said in a note to clients: “We believe the miss was in large part driven by Motorola Mobility, with revenue down meaningfully versus our and Street numbers and costs ahead of expectations.”
Google’s costs, excluding the payments it makes to referral sites for traffic, tripled during the quarter. Its “other cost of revenues”, which includes infrastructure operations, amortisation of intangible assets, content acquisition costs, credit card processing charges and manufacturing and inventory-related costs, increased to $3.78bn, up from $1.17bn in the year-ago quarter, to make up 27 per cent of revenues.
Adding to the chaos, a Nasdaq website widely used by traders crashed after many flocked to the site to check the status of the company shares. Nasdaq confirmed when the service was restored, at about 1.30pm eastern time, that clients “may have experienced connectivity issues”.
Charles Elson, professor of finance at the University of Delaware, said that the early publication was more embarrassing than damaging, because the figures were available for all to see. “If the market has the chance to respond to it, it’s OK. I don’t see what the harm is,” he said. “They halt the shares to give the market time to react to it. You want to give the market the chance to react.”
Separately, Google said it would launch a $250 version of its Chromebook laptop next week, coinciding with the launch of Microsoft’s $500 Surface tablet and a rumoured $250 iPad Mini.
Additional reporting by Chris Nuttall in San Francisco
end quote from:
Stunned investors wound up sending Google shares 8 per cent lower on the day as it missed earnings forecasts by more than a dollar, reflecting a continued fall in advertising prices and costs associated with its acquisition of Motorola Mobility.
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Speaking to analysts after the market closed on Thursday, Larry Page, chief executive, said: “I’m sorry for the scramble earlier today. Our printers said they pressed send on the release a bit early.” The tech group asked Nasdaq to halt trading in its stock while the company worked to “finalise the document”.
The premature release of Google’s balance sheet and results, alongside an incomplete press statement that was marked as “pending Larry quote”, referring to Mr Page, appeared on the SEC website around midday New York time. The company was not scheduled to report until after the market close.
Google shares fell as much as 10 per cent to $676 before trading was halted. Their partial recovery to $695 when trading resumed at 3.20pm in New York still wiped out half the price gain for the year to date and took the group’s market capitalisation below that of Microsoft.
Shares in RR Donnelley, Google’s financial printer, fell almost 6 per cent after the Google statement, but later recovered most of their losses to close 0.9 per cent lower at $10.76.
Google’s consolidated revenues grew 45 per cent to $14.1bn for the quarter ended September 30. Net income fell 20 per cent to $2.18bn. Earnings of $9.03 per share were below analysts’ expectations of about $10.60.
The average cost-per-click of an advertisement fell about 15 per cent from the third quarter of 2011. Analysts at Citigroup had expected a year-on-year fall of about 11 per cent.
Mr Page, who has been absent from public appearances in recent months due to a mystery illness affecting his ability to speak, said: “As you can still hear my voice is still hoarse so I’ll keep these comments brief.”
During his 10-minute overview he revealed that annualised run-rate revenue from mobile devices reached $8bn, including advertising and the Google Play content store, up from $2.5bn in mobile ads alone a year ago.
In depth
GoogleAnthony DiClemente, internet analyst at Barclays, said in a note to clients: “We believe the miss was in large part driven by Motorola Mobility, with revenue down meaningfully versus our and Street numbers and costs ahead of expectations.”
Google’s costs, excluding the payments it makes to referral sites for traffic, tripled during the quarter. Its “other cost of revenues”, which includes infrastructure operations, amortisation of intangible assets, content acquisition costs, credit card processing charges and manufacturing and inventory-related costs, increased to $3.78bn, up from $1.17bn in the year-ago quarter, to make up 27 per cent of revenues.
Adding to the chaos, a Nasdaq website widely used by traders crashed after many flocked to the site to check the status of the company shares. Nasdaq confirmed when the service was restored, at about 1.30pm eastern time, that clients “may have experienced connectivity issues”.
Charles Elson, professor of finance at the University of Delaware, said that the early publication was more embarrassing than damaging, because the figures were available for all to see. “If the market has the chance to respond to it, it’s OK. I don’t see what the harm is,” he said. “They halt the shares to give the market time to react to it. You want to give the market the chance to react.”
Separately, Google said it would launch a $250 version of its Chromebook laptop next week, coinciding with the launch of Microsoft’s $500 Surface tablet and a rumoured $250 iPad Mini.
Additional reporting by Chris Nuttall in San Francisco
end quote from:
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