Motorola acquisition and botched release timing blight Google Q3 results

Google has been one of the star performers of the Nasdaq this year, rising from a low of $556 in June to an all time high of $774 this month. Yesterday, the shares dropped 10% at one point after the accidental release of disappointing earnings by a printing company meant that investors were scrambling to catch up with events . The earnings release was expected to come after the market close.

The premature release of Google’s balance sheet and results, alongside an incomplete press statement that was marked as “pending Larry quote”, appeared on the SEC website around midday New York time.

After a two hour suspension in trading, the shares the shares recovered partially to end the regular session down 8% at $695 and moved up to $702 in after hours trading.

The company delivered a third quarter profit of $2.18 billion, or $6.53 a share, compared with a profit of $2.73 billion, or $8.33 a share, for the year-earlier period. Adjusted earnings were $9.03 a share, compared with expectations of $10.63 a share, on revenue of $11.39 billion as average cost per click for its ads fell 15% year on year versus expectations of 11%. Consolidated revenues grew 45 per cent to $14.1bn for the quarter. Its newly acquired mobile arm, Motorola Mobility produced a $527 million operating loss for the quarter after amortisation expenses of $317 million.

The poor earnings for the third quarter come after a similar sell off after the first quarter results. The volatile earnings picture from this tech giant look likely to persist as its $12.5 billion acquisition of Motorola continues to be scrutinised by wary investors. The mishap with the earnings release was unfortunate for CEO Larry Page, but the 15% drop in ad pricing is of greater concern and points to further downward pressure on the share price after the upward move since the summer.

Contrarian Investor UK