Business

Google shares suspended after profit results error

  • 18 October 2012
  • From the section Business

Trading in Google shares was suspended for two-and-a-half hours after the internet giant released its third-quarter results early by mistake.

Its quarterly profits fell 20% from a year earlier to $2.18bn (£1.35bn) - below analysts' expectations.

Google blamed financial printing firm RR Donnelley for filing an early draft of the results, which had been expected after the closing bell.

Shares in Google were down 9% when trading in the stock was suspended.

When trading resumed, the shares recovered slightly to end the day 8% lower.

Google chief executive Larry Page apologised to analysts on a conference call after the market closed.

"I'm sorry for the scramble earlier today," he said, adding that the company had had a strong quarter.

'Pending Larry quote'

In a statement after the inadvertent release, Google said: "Earlier this morning RR Donnelley, the financial printer, informed us that they had filed our draft 8K earnings statement without authorisation.

"We have ceased trading on Nasdaq while we work to finalise the document. Once it's finalised we will release our earnings, resume trading on Nasdaq and hold our earnings call as normal at 1:30 PST."

The company's draft results statement, filed with the Securities and Exchange Commission, was published at 09:30 Pacific time (16:30 GMT), three-and-a-half hours ahead of schedule.

It says "PENDING LARRY QUOTE" at the beginning, referring to chief executive Larry Page and indicating that it was not ready for publication.

Its final results statement, published at 12:00 Pacific time (19:00 GMT), included the following quotation from Mr Page: "We had a strong quarter. Revenue was up 45% year-on-year, and, at just fourteen years old, we cleared our first $14bn revenue quarter.

"I am also really excited about the progress we're making creating a beautifully simple, intuitive Google experience across all devices."

Net revenue rose to $11.3bn from $7.5bn, but was still below forecasts.

Including websites that generate traffic for Google's ads, revenue rose 45% to $14.1bn.

'No time'

The slide in Google's share price took the company's market value back down below that of Microsoft, which it had overtaken earlier this month.

Joe Saluzzi from Themis Trading said, "you can't make those mistakes any more".

He added: "Mistake or not, the earnings are earnings. The problem is when this happens in the middle of the day, there is no time for a conference call to massage it, there is no time for analysts' questions and for an evaluation."

Google completed the purchase of the loss-making mobile phone maker Motorola Mobility for $12.5bn earlier this year and has been struggling to turn the firm around.

Costs related to the acquisition - for employee stock compensation and restructuring charges - knocked Google's overall results, as did the strong dollar.

The company said that if foreign exchange rates had been unchanged, its revenue would have been $136m higher.

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