Google shares dive on poor numbers
Google quarterly results fell well short of Wall Street's expectations after its core advertising business slowed, stunning investors accustomed to consistently rapid growth from the Internet giant and wiping more than 9 per cent off its market value.
The disappointing numbers today came hours ahead of schedule in a rare instance of premature filing. Google blamed the misfire on an unauthorised filing by its financial printers, RR Donnelley, and later confirmed the numbers' accuracy.
The earnings report, which had not been expected until after the market close, revealed a weakening in Google's core Internet advertising business and persistent losses at its recently acquired cellphone business, Motorola Mobility.
Shares of Google, the world's largest Internet search engine, were down 9 per cent at $690.84 after a brief trading halt. Some analysts said the inadvertent results release spurred confusion and exacerbated its stock price decline.
But other analysts were unnerved by softness in the numbers. Net revenue growth at Google's main Internet business increased 17 per cent year-over-year, the first time growth in that business has fallen below 20 per cent since 2009.
The slowdown in revenue growth came on the back of falling advertising rates as users shift increasingly to mobile devices, where it charges less than it can on computers or laptops.
"It was just too rapid a deceleration," said Pivotal Research Group analyst Brian Wieser. "Many of the same underlying trends drive Facebook advertising."
Shares in Facebook, which headed south shortly after Google's inadvertent filing, were down 4.6 per cent.
Google's snafu recalled Facebook's debut, which was marred by technical glitches that also spooked traders and contributed to the stock's first-day decline.
Today, Google, which has been struggling to turn around a Motorola Mobility hardware business it bought for $12.5 billion, reported a 20 per cent dive in net income to $2.18 billion. Excluding certain items, it earned $9.03 a share, vastly under-performing the $10.65 analysts had expected, on average.
"We have been saying this thing was ripe for a pullback. It's not like they're Google not being Google, but you still have some major issues," said BCG analyst Colin Gillis.
"Click prices declined for the fourth consecutive quarter after rising for eight consecutive quarters before then. That's a negative. This is the mobile problem."
"The other bit is the Motorola millstone had been ignored by the market, and - boom - now you've got weak revenue from Motorola. When you acquire a business and you're about to whack all kinds of people and close offices, you know what happens to the employees? They take their eye off the ball. Sales are down," Mr Gillis explained.