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Google shares down upon missing profit expectations

updated 02:07 pm EDT, Thu October 18, 2012

GOOG down nine percent before trading halt

Shares in Google tumbled nearly ten percent today as third quarter financials for the search giant leaked ahead of schedule, revealing earnings that were well short of analyst expectations. The company's shares fell as much as 10 percent on the day, costing Google about $19 billion in market cap, before trading was halted at $687.39, down $68.10 or 9.01 percent from its open. Google says its shares will resume trading once the company has prepared a final version of its financial statement.

The draft 8K bears a note saying "PENDING LARRY QUOTE," indicating that it is meant to stay in draft form until Google can prepare a statement from co-founder Larry Page. It reveals $14.1 billion in revenue for the quarter and $3.01 billion, down from $3.18 billion year-over-year.

Google notes in its release that its average cost-per-click declined 15 percent compared to the third quarter last year. That decline in cost-per-click translates to a third quarter profit of $2.18 billion, down from $2.73 billion year-over-year.

Google reported third quarter earnings per share of $9.03, down from $9.72 year-over-year. Analysts had expected that the company would do $10.65 per share with a net revenue of $11.86 billion.

Google closed its acquisition of Motorola in May and subsequently pledged to streamline operations at the hardware manufacturer, cutting staff and reducing product lines. Motorola recorded revenues of about $2.58 billion for the quarter, $1.78 billion from the mobile segment and $797 million from the home segment. That figure accounted for 18 percent of consolidated revenues in the third quarter of 2012. Google's new hardware arm, though, still posted a GAAP operating loss of $527 million, $505 million for the mobile segment and $22 million or the home segment. Motorola had a non-GAAP loss of $151 million.

Google has blamed the early draft 8K release on RR Donnelley, the financial printer. Shares in RR Donnelley have subsequently dropped five percent.

by MacNN Staff




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