Google issues a bad report early, hurting Nasdaq

Associated Press Modified: October 18, 2012 at 3:31 pm •  Published: October 18, 2012
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NEW YORK (AP) — Google plummeted almost $80 per share, more than 10 percent, and trading in the stock was halted two and a half hours Thursday after a disappointing earnings report was published ahead of schedule and surprised investors.

Bleak figures in the report about online advertising dragged down Facebook stock, too, and the Nasdaq composite index skidded 1 percent on a day when the broader stock market was mostly flat.

Google was trading at $754 per share at 12:30 p.m. EDT, then fell almost $20 in a minute after investors saw the report, a draft. It dropped as low as $676, and Google halted trading at 12:50 p.m., with the stock at $687.

The stock was halted until 3:20 p.m. Companies routinely halt trading when they have news to release to investors during the market day, but two and a half hours is an unusually long suspension.

When trading in Google resumed, the stock climbed slightly, but it still finished down $60.49, or 8 percent, at $695.

Google blamed a printing company, R.R. Donnelley & Sons, for filing its quarterly statement with the Securities and Exchange Commission more than three hours ahead of schedule.

R.R. Donnelley & Sons stock also plunged — as much as 71 cents, or 6.5 percent, to $10.14 — after the mistake. It later recovered most of the loss and ended the day down 9 cents.

The Google report said it earned $2.18 billion from July through September, down from $2.73 billion in the same period a year ago.

Profit came to $6.53 per share, and would have been $9.03 if not for accounting costs from employee stock compensation and restructuring charges related to Google's acquisition of Motorola Mobility, a cellphone maker.

Still, analysts polled by FactSet, a provider of financial data, were expecting $10.63 per share.

Besides disappointing investors, the report was an embarrassment for Google. Near the top of the draft, the report said, "PENDING LARRY QUOTE," apparently a place to insert a quote from Larry Page, one of Google's founders.

The earnings report said that Google made about 15 percent less than a year earlier each time a user clicks on an online ad. That is the fourth straight quarter of erosion in Google's ad prices.

It is a warning sign for Facebook, which is trying to figure out how to make money off advertising on mobile devices.

Facebook stock declined 90 cents, or 4.6 percent, at $18.98, with most of the loss coming after Google's earnings report. The company went public in May at $38, but it has fallen as low as $17.55, in part because of investor concerns about ads.

"Google and Facebook are very reliant on online ads," said Scott Kessler, head of technology sector equity research at S&P Capital IQ, a research firm. "So if Google's results indicate a lack of demand and growth, that's obviously a worry for Facebook."

Google is the third-largest component in the Nasdaq composite, behind Apple and Microsoft. The Nasdaq finished down 31.25 points at 3,072.87.


by Steve Lackmeyer
Reporter Sr.
Steve Lackmeyer is a reporter and columnist who started his career at The Oklahoman in 1990. Since then, he has won numerous awards for his coverage, which included the 1995 bombing of the Alfred P. Murrah Federal Building, the city's Metropolitan...
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