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2012-10-19 12:49:24
Trading in Google shares was suspended for two-and-a-half hours after the
internet giant released its third-quarter results early by mistake.
Its quarterly profits fell 20% from a year earlier to $2.18bn ( 1.35bn) - below
analysts' expectations.
Google blamed financial printing firm RR Donnelley for filing an early draft of
the results, which had been expected after the closing bell.
Shares in Google were down 9% when trading in the stock was suspended.
When trading resumed, the shares recovered slightly to end the day 8% lower.
Google chief executive Larry Page apologised to analysts on a conference call
after the market closed.
"I'm sorry for the scramble earlier today," he said, adding that the company
had had a strong quarter.
'Pending Larry quote'
In a statement after the inadvertent release, Google said: "Earlier this
morning RR Donnelley, the financial printer, informed us that they had filed
our draft 8K earnings statement without authorisation.
"We have ceased trading on Nasdaq while we work to finalise the document. Once
it's finalised we will release our earnings, resume trading on Nasdaq and hold
our earnings call as normal at 1:30 PST."
The company's draft results statement, filed with the Securities and Exchange
Commission, was published at 09:30 Pacific time (16:30 GMT), three-and-a-half
hours ahead of schedule.
It says "PENDING LARRY QUOTE" at the beginning, referring to chief executive
Larry Page and indicating that it was not ready for publication.
Its final results statement, published at 12:00 Pacific time (19:00 GMT),
included the following quotation from Mr Page: "We had a strong quarter.
Revenue was up 45% year-on-year, and, at just fourteen years old, we cleared
our first $14bn revenue quarter.
"I am also really excited about the progress we're making creating a
beautifully simple, intuitive Google experience across all devices."
Net revenue rose to $11.3bn from $7.5bn, but was still below forecasts.
Including websites that generate traffic for Google's ads, revenue rose 45% to
$14.1bn.
'No time'
The slide in Google's share price took the company's market value back down
below that of Microsoft, which it had overtaken earlier this month.
Joe Saluzzi from Themis Trading said, "you can't make those mistakes any more".
He added: "Mistake or not, the earnings are earnings. The problem is when this
happens in the middle of the day, there is no time for a conference call to
massage it, there is no time for analysts' questions and for an evaluation."
Google completed the purchase of the loss-making mobile phone maker Motorola
Mobility for $12.5bn earlier this year and has been struggling to turn the firm
around.
Costs related to the acquisition - for employee stock compensation and
restructuring charges - knocked Google's overall results, as did the strong
dollar.
The company said that if foreign exchange rates had been unchanged, its revenue
would have been $136m higher.
Analysis
Ben Thompson Business reporter, New York
While Google's results are disappointing, coming in well below analyst
expectations, it was their early publication that spooked investors. Shares
slumped 9%, wiping $19bn off the value of Google before trade was suspended,
and only managed to claw back a small proportion of those losses when trade
resumed.
But why is that accidental publication so damaging? Largely because it doesn't
give Google the opportunity to explain the figures or manage market
expectations. In normal circumstances, earnings reports come with a whole
series of conference calls and briefings between the firm's management and
investors, traders and journalists. Without the briefings, the numbers are left
to speak for themselves.
There's also the old saying that markets don't like surprises. Results being
published three hours early counts as one of those surprises. So Google is now
on the back foot, trying to reassure the markets and give some context to the
figures.