Gaffe leads to Google suspension

EARLY RELEASE::Google Inc blamed printer R.R. Donnelley & Sons Co for filing the firm’s quarterly statement more than three hours ahead of schedule

AFP, NEW YORK

Sat, Oct 20, 2012 - Page 15

Google Inc shares were suspended for more than two hours on Thursday after an erroneous early release of its disappointing third-quarter results shocked the market and sent the Internet giant’s stock price tumbling.

The figures were made public in a regulatory filing hours ahead of their scheduled publication, which Google called a “draft” released by a printer “without authorization.”

Google blamed printer R.R. Donnelley & Sons Co for filing the company’s quarterly statement with the Securities and Exchange Commission more than three hours ahead of schedule.

“We are fully engaged in an investigation to determine how this event took place and are pursuing our first obligation, which is to serve our valued customer,” R.R. Donnelley said in a statement.

The final version came a few hours later, with the same numbers, but with a comment from Google chief executive Larry Page in place of a line on the draft which said: “Pending Larry quote.”

“We had a strong quarter,” Page said in the statement.

However, the numbers told a slightly different story.

Net profit was reported at US$2.18 billion, down 20 percent from US$2.73 billion in the same period the previous year.

Google shares slid 8 percent to close at US$695, taking the company’s market value back down below that of Microsoft Corp, which it overtook earlier this month as the No. 2 player in the tech sector behind Apple Inc.

In a conference call, Page later apologized for the mistake.

“I am sorry for the scramble earlier today. As our printers have said, they hit send on the release just a bit early,” he said.

Google said revenue, including sales from its newly acquired Motorola Mobility Holdings Inc unit, amounted to US$14.1 billion. Google’s own ad and other revenue rose 19 percent from the previous year to US$11.53 billion.

Google’s earnings per share, adjusted for special items, were US$9.03, far below Wall Street expectations of US$10.65.

Analysts were largely unfazed by the weak results.

“At first blush, Google missed on the revenue and earnings per share lines, but a closer look suggests problems seem related to Motorola,” said Brian Pitz and Brian Fitzgerald at Jefferies & Co in a note to clients.

“Google core search seems healthy,” they said, maintaining a price target of US$850.

Independent tech analyst Jeff Kagan called the soft results “just a hiccup in Google’s climb” and said the firm was still “on the growth side of the wave.”

Anthony DiClemente at Barclays PLC argued that “the sell-off presents a buying opportunity, as we think the Street was overly optimistic going into the quarter and did not fully discount the potential Motorola drag on the business.”

Google in May completed a US$12.9 billion deal for Motorola Mobility, a key manufacturer of smartphones and other devices that put the Internet giant in head-to-head competition with Apple.

Google acquired 17,000 patents with the purchase and it has been strengthening its patent portfolio in the fight for dominance in the smartphone and tablet market.

The firm remains dominant in its core area of online ads with a 74.5 percent share of the US search market, eMarketer data showed.

Google’s ad revenue alone is expected to account for 41.3 percent of total US digital ad revenues this year, eMarketer said.