For a company that most people think runs like a Swiss watch, Google presented Wall Street with an unexpected gift in front of its scheduled earnings release by inadvertently making public its Q3 results prior to its 4:30 call with analysts prematurely. Ooops! And, this was not the only slip.
Turns out an SEC filing was posted inadvertently. That could be viewed as a minor slip up, except that what it revealed is that Google’s reported third-quarter earnings are of $9.03. This is far south of what the Street was expecting with a pre-call view consensus at $10.65. The stock is getting pounded. At 1:23 EDT Google shares were selling at 687.30, off 9.03 percent on the day, and selling pressures are not likely to let up until there is a whole lot of explaining to do later in the day. Trading in the stock has since been halted.
Highlights and low lights include:
So where and what is the beef?
OK you say, “not so bad, although that decline in price per clicks is disconcerting, what’s the problem!” But wait! There is more. The thing that has investors agitated can be summed up in a word, Motorola.
Operating Income – On a consolidated basis, GAAP operating income in the third quarter of 2012 was $2.74 billion, or 19 percent of revenue. This compares to GAAP operating income of $3.06 billion, or 31 percent of revenues, in the third quarter of 2011. Non-GAAP operating income in the third quarter of 2012 was $3.80 billion, or 27 percent of revenue. This compares to non-GAAP operating income of $3.63 billion, or 37 percent of revenue, in the third quarter of 2011.
Google Operating Income – GAAP operating income for Google was $3.26 billion, or 28 percent of Google revenues, in the third quarter of 2012. This compares to GAAP operating income of $3.06 billion, or 31 percent of Google revenues, in the third quarter of 2011. Non-GAAP operating income in the third quarter of 2012 was $3.95 billion, or 34 percent of Google revenues. This compares to non-GAAP operating income of $3.63 billion in the third quarter of 2011, or 37 percent of Google revenue.
Motorola Operating Loss – GAAP operating loss for Motorola was $527 million ($505 million for the mobile segment and $22 million for the home segment), or -20 percent of Motorola revenue in the third quarter of 2012. Non-GAAP operating loss for Motorola in the third quarter of 2012 was $151 million, or –six percent of Motorola revenues.
This story is going to get really interesting when the Google executive team goes live later to explain the results. It was noted in the premature posting that space was left “PENDING LARRY QUOTE.”
This refers to the typical explanation of the results that will come from Google CEO Larry Page. Not only is he going to have to explain the overall results, but he is going to have to discuss what happens next quarter, particularly how the Motorola acquisition get turned around and how doing so is not going to upset the Android ecosystem (pardon the expression) apple cart. And, those click numbers are going to be a hot topic as well.
Check back with us later. This is going to be real interesting.
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