Google shares fall on early publication of poor results
DISAPPOINTING THIRD-QUARTER earnings from Google were accidentally published several hours earlier than planned yesterday, sparking a panic sell-off of the internet company’s shares until trading was halted.
The figures showed Google’s consolidated revenues grew 45 per cent to $14.1 billion for the quarter ended September 30th. Earnings of $9.03 per share were below analysts’ expectations of about $10.60.
Google blamed its financial printer, RR Donnelley, for the unfinalised release. “Earlier this morning RR Donnelley . . . informed us that they had filed our draft 8K earnings statement without authorisation,” Google said in a statement. Google requested that Nasdaq halt trading in its stock while the company worked to “finalise the document”.
The premature release of Google’s balance sheet and results, alongside a partially written press statement marked “PENDING LARRY QUOTE”, referring to chief executive Larry Page, appeared on the SEC website after midday in New York yesterday. The company was not scheduled to report until the market close.
Google’s shares fell as much as 10.51 per cent to $676 a share before trading was halted. Shares in RR Donnelley, the printer, fell almost 6 per cent after the Google statement.
The draft figures showed the average cost-per-click of a Google advertisement fell by about 15 per cent from the third quarter of 2011 – and 3 per cent from the second quarter of 2012. Analysts at Citigroup had expected a year-on-year fall of about 11 per cent.
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 $3.78 billion, up from $1.17 billion in the year-ago quarter, to make up 27 per cent of revenues.
Adding to the chaos, a Nasdaq website widely used by traders appeared to have crashed as many checked the status of the shares.
Charles Elson, professor of finance at the University of Delaware, said 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 okay. I don’t see what the harm is,” he said. – (Copyright The Financial Times Limited 2012)