Google Stock Smashed After Massive Earnings Blunder

by Tom Taulli | October 18, 2012 1:42 pm

Google Stock Smashed After Massive Earnings Blunder

Investors hawking Google (NASDAQ:GOOG[1]) news in anticipation of its post-bell report Thursday might have been stunned to see the stock suddenly sell off after noon.

The culprit: A big, fat accident.

CNN Money reports that the company accidentally filed its 8-K early[2] — even including a line saying “PENDING LARRY QUOTE,” as well as other excerpts signaling the form wasn’t complete — and disappointing results therein sent shares off by 9% before trading was halted.

Google posted third-quarter earnings per share of $9.03, falling well below Wall Street estimates of $10.63. Revenues also were light at $11.3 billion, which disappointed analysts looking for $11.9 billion.

Motorola also was a drag, contributing an adjusted operating loss of $151 million. Google previously had warned that charges related to payroll reductions and operational changes would cost more than originally estimated[3].

Digging in the 8-K, cost per clicks stood out; they declined 15% over the past year, and even 3% quarter-over-quarter. This might be the result of the rapid shift to mobile, which tends to have lower ad rates — an issue faced by other Internet giants such as Facebook (NASDAQ:FB[4]).

The company appears to be under pressure from the slowing global economy, which also has impacted other tech operators like IBM (NYSE:IBM[5]) and Intel (NASDAQ:INTC[6]), as seen with their own weak earnings reports[7] this week.

Google faulted its financial printer R.R. Donnelley & Sons (NASDAQ:RRD[8]) — whose stock took a hit afterward, too — for the gaffe:

“Earlier this morning RR Donnelley, the financial printer, informed us that they had filed our draft 8K earnings statement without authorization. We have ceased trading on NASDAQ while we work to finalize the document. Once it’s finalized we will release our earnings, resume trading on NASDAQ and hold our earnings call as normal at 1:30 PM PT,” the company said.

Please visit InvestorPlace later in the day for more updates on Google’s earnings incident.

Tom Taulli runs the InvestorPlace blog IPOPlaybook[9], a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.[10]”  Follow him on Twitter at @ttaulli[11]. As of this writing, he did not hold a position in any of the aforementioned securities.

Endnotes:
  1. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  2. accidentally filed its 8-K early: http://money.cnn.com/2012/10/18/technology/google-earnings/index.html?iid=Lead
  3. would cost more than originally estimated: http://investorplace.com/2012/10/google-warns-of-more-motorola-job-cuts/
  4. FB: http://studio-5.financialcontent.com/investplace/quote?Symbol=FB
  5. IBM: http://studio-5.financialcontent.com/investplace/quote?Symbol=IBM
  6. INTC: http://studio-5.financialcontent.com/investplace/quote?Symbol=INTC
  7. own weak earnings reports: http://investorplace.com/2012/10/ibm-and-intel-earnings-could-ding-the-dow/
  8. RRD: http://studio-5.financialcontent.com/investplace/quote?Symbol=RRD
  9. IPOPlaybook: http://investorplace.com/ipo-playbook/
  10. How to Create the Next Facebook.: http://www.amazon.com/gp/product/1430246472/ref=s9_simh_gw_p14_d0_i1?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=center-3&pf_rd_r=0GRB6ZMCTYDZVNG7Q7NV&pf_rd_t=101&pf_rd_p=470938811&pf_rd_i=507846
  11. @ttaulli: https://twitter.com/ttaulli

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