Friday, October 19, 2012

Google Inc (NASDAQ:GOOG)’s Folly Affects Company Shares and other Ad-supported Web Businesses

Google Inc (NASDAQ:GOOG) has made two huge blunders, which have affected its shares tremendously. Firstly, the company’s Q3 results were inadvertently declared ahead of schedule and the figures are lower than analyst predictions. The official release is not available on the Google investor relations site, but an initial version of the Q3 earnings were filed with the SEC, with the phrase “Pending Larry Quote”; a veiled, yet obvious reference to CEO Larry Page.

Shares of Google were down over 8%%, to $695 after hitting a low of $676, along with other ad-supported Internet businesses being caught in the whiplash like Facebook Inc(NASDAQ:FB), AOL, Inc.(NYSE:AOL), Yahoo! Inc.(NASDAQ:YHOO), , all of which have experienced declines of 4.4% to $19.01, 1.7%, to $36.45, %, to $15.93, and 0.6%, to $29.41, respectively.

Revenue ex-traffic acquisition expenses were $11.33 billion, when Wall Street had predicted $11.9 billion. Non-GAAP EPS of $9.03 a share was down from $9.72 last year and well below Street predictions of $10.65 a share. The Non-GAAP operating margin fell from 37% to 27%. The net revenue shot up by 45% to $14.1 billion with ttraffic acquisition costs as a percentage of revenue going up 26% from 24% in this quarter, compared to the same period a year back.

Motorola revenues constituted about 18% of the total figure, including the $1.78 billion and $797 million from mobile devices and home segment such as cable set-top boxes. StreetAccount predicted around $2.87 billion for Motorola, but the figure came to $2.58 billion. Sites revenue did well and moved up by 15% from a year back but failed to meet expectations at $7.73 billion.

The network revenue somewhat matched up to the consensus with $3.13 billion, climbing 21%. 53% of the entire revenue was due to the international segment at $6.11 billion, although the company expected better results if not for foreign exchange issues. Cost per click dropped 4% sequentially and 15% year over year while paid clicks moved up 6% sequentially and 33% year over year.

Google put the blame of the pre-mature release on financial printer RR Donelley stating that they had filed the draft 8K earnings statement without authorization. For the time being, trading on Nasdaq has been halted till the final document is completed. Normal schedule will resume after the document is prepared.

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