$20bn wiped from Google's shares after results blunder

News of slump in profits shocks Wall Street after update is sent by mistake

New York

For a company renowned for its mastery over vast vaults of information, Google suffered from a very public blunder last night after its quarterly results were published prematurely, sending its share price into a tailspin as shocked traders digested news of a sharp 20 per cent slump in profits.

Wall Street had expected the search engine giant to give the latest update on its performance after the stock market closed. But unexpectedly, the figures popped up in a filing with American regulators, obviously put out prematurely, with Google blaming its financial printing firm, RR Donnelley.

Confirmation that the early release was anything but planned came in the introduction, which included, in bold letters, no less, the line: "PENDING LARRY QUOTE."

The marker, immediately identified as a reference to commentary from Google's chief executive Larry Page, was soon pasted across the internet as evidence of the blunder.

Mr Page, who earlier this week made his first public appearance in several months after reportedly suffering from an undisclosed ailment that caused him to temporary lose his voice, was later forced to apologise for the snafu. "I'm sorry for the scramble earlier today," he said as the company's planned earnings conference call finally got underway last night. "As our printers have said, they hit send on the release just a bit early," Mr Page said.

For investors, however, the figures proved more urgent than the comedy of the premature release. The results were below expectations, with the both profits and revenues at the Silicon Valley behemoth coming in below what the market had pencilled in.

Net income at the company was down 20 per cent to $2.18bn, while net revenues, excluding traffic acquisition costs, were reported at $11.3bn for the third quarter, well below Wall Street hopes of about $11.9bn. The company, which continues to be weighed down by weakness at the Motorola Mobility hardware business that it bought for $12.5bn, also said its average cost per click – which measures what it earns from advertisers – had declined for the fourth consecutive quarter.

The numbers soon triggered a sell-off in Google shares, wiping around 9 per cent off the tech group's market value, or around $20bn, before trading was suspended as it finalised its release. Later, once trading resumed, the stock recovered to end the session down 8 per cent.

Before Mr Page's apology in the afternoon, a Google spokesman blamed the mistake on the financial printing firm RR Donnelley. "Earlier this morning RR Donnelley, the financial printer, informed us that they filed our draft 8K earnings statement without authorisation," the spokesman said. "We have ceased trading on Nasdaq while we work to finalise the document. Once its finalised we will release our earnings, resume trading on Nasdaq and hold our earnings call as normal."

On the stock market, traders were first surprised and then, just as quickly, disappointed. Joe Saluzzi, co-manager of trading at Themis Trading, told Reuters: "You can't make those mistakes anymore... it's obvious this was some sort of mistake that went out too early. [But] mistake or not the earnings are earnings, [and] the problem is when this happens in the middle of the day, there is no time for analysts' questions and for an evaluation."

Sameet Sinha, an analyst at B Riley, said the slowdown in the company's core business was "shocking". "I don't think anybody saw this," he explained, adding: "The only conclusion I can look at is – search is happening more and more outside of Google."

This, he warned, could point to a broader shift in the way people conduct searches on the internet, particularly when it comes to e-commerce. "The big fear has always been – what if people decide to just go straight to Amazon and do their searches? And potentially that's what could be happening."

Others pointed to the continued weakness at Motorola Mobility, which Google has been attempting to turn around by restructuring the business since buying it last year.

"The Motorola millstone had been ignored by the market and – boom – now you've got weak revenue from Motorola," BCG analyst Colin Gillis said, noting that Google "was ripe for a pullback". "When you acquire a business and you're about to whack all kinds of people and close offices, you know what happens to the employees? They take their eye off the ball. Sales are down."

The chaotic decline in Google's shares – their worst performance since January – also had wider repercussions last night as it dragged down other technology companies, and the wider market, with all three of New York's major equity indices – the Dow Jones Industrial Average, the S&P 500 and Nasdaq – closing lower on the day.

"It's a huge impact on the market, and especially the tech stocks. What happened to Google is a continuation in the tech sector of some very poor earnings numbers," Paul Nolte, a managing director at investment firm Dearborn Partners, said.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Senior Digital Marketing Consultant

£28000 - £45000 per annum: Recruitment Genius: A Senior Digital Marketing Cons...

Recruitment Genius: Assistant Stores Keeper

£16640 - £18500 per annum: Recruitment Genius: An Assistant Stores Keeper is r...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Software Developer - C# / ASP.NET / SQL

£17000 - £30000 per annum: Recruitment Genius: Developer required to join a bu...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before