No matter how hard you plan as an investor, you can’t account for some idiot pressing the wrong button and throwing the markets in to disarray.
This happened on Friday, when the much-anticipated Google quarterly results unexpectedly revealed advertising revenues were slowing – wiping 9% off the Wall St value before the close of business.
An over-eager office worker published the results before Wall St closed – when the schedule was to publish over the weekend and let time take some of the sting out of the figures.
Google blamed the early peek at the figures on an unauthorised filing by financial printers, but later confirmed the numbers’ accuracy.
Trading in Google shares was suspended for more than two hours while executives sorted out the mess.
Motorola blamed for revenue fall
Not that business is bad over at Google – it’s just not quite as good as it was.
Google Mobile is powering to generate $8 billion a year revenues as a high spot – but whatever gloss the markets try to put on the figures, net income plunged 20% to $2.18 billion.
“We have been saying this thing was ripe for a pullback. It’s not like they’re Google not being Google, but you still have some major issues,” said BCG analyst Colin Gillis.
“Click prices declined for the fourth consecutive quarter after rising for eight consecutive quarters before then. That’s a negative. This is the mobile problem.”
“The other bit is the Motorola millstone had been ignored by the market, and – boom – now you’ve got weak revenue from Motorola. 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.”
Gillis was referring to Google’s recent $12.5 billion buyout of Motorola Mobility.
Net revenue growth at Google’s main Internet business increased 17% year-over-year, the first time growth in that business has fallen below 20% since 2009
Google CEO Larry Page agreed that mobile ad rates were below the rates that Google collects for ads that appear on its standard website, while explaining the proliferation of web-connected devices is creating “a huge new universe of opportunities for advertisers.”
“We’re uniquely positioned to get through that transition and to really profit from it,” he said.
“We had a strong quarter. Revenue was up 45% year-on-year, and, at just 14 years old, we cleared our first $14 billion revenue quarter.
“I am also really excited about the progress we’re making creating a beautifully simple, intuitive Google experience across all devices.”