Google's Market Value Plunges After Blunder
Google saw nearly $20bn wiped off its market value after third quarter earning figures were released prematurely by its financial printer.
The internet search and advertising giant, which recently overtook Microsoft Corp to become the second-largest US technology company, reported a 20% drop in net income to $2.18bn (£1.36bn) between July and September.
But the announcement, which was expected after the market close, was released early after financial printer RR Donnelley filed a draft of its earnings statement without authorisation on Thursday morning.
That resulted in $19.8bn (£12.33bn) being wiped off its value by the market close and trading being halted on the Nasdaq after losses prompted the share price to plummet by up to 10% at some stages.
Google also reported net revenue - excluding traffic acquisition costs - of $11.3bn (£7.04bn) for the third quarter of 2012, below Wall Street expectations of around $11.9bn (£7.41bn).
It has been struggling to turn around loss-making Motorola Mobility it bought for $12.5bn (£7.78bn).
A spokesman said: "Earlier today RR Donnelley, the financial printer, informed us that they had filed our draft 8K earnings statement without authorisation.
"We have ceased trading on Nasdaq while we work to finalise the document.
"Once it's finalised, we will release our earnings, resume trading on Nasdaq and hold our earnings call as normal at 1:30 Pacific Time."
The second paragraph of the press release said "pending Larry quote", suggesting the space was reserved for comment from chief executive Larry Page.
BCG analyst Colin Gillis said: "Click prices declined for the fourth consecutive quarter after rising for eight consecutive quarters before then.
"The other bit is the Motorola millstone had been ignored by the market and - boom - now you've got weak revenue from Motorola."
Microsoft Corp also revealed its quarterly profit fell by a more than expected 22%, as sales of computers running Windows operating systems dipped.
Shares in the company fell by more than 2% in after-hours trading, with sales of PCs expected to fall this year for the first time since 2001 up against strong competition from Apple's iPad.
Microsoft is betting on the release of touch-friendly Windows 8 to boost flagging sales when it launches next week.
It said first quarter profits fell to $4.47bn (£2.79bn) and sales fell 8% to $16.01bn (£9.98bn).
what do you think?
My Income dropped by 20% also I don't know how I'll cope with a drop of £30. But Im sure Mr & Mrs Google will struggle through
I am concerned about the statement which says "without authorisation" because if they did have authorisation first, it might not have been so damaging to Google shares and 11.9 billion and 11.3 billion seem like very similar amounts to me considering they are dealing in billions. If it was 10 or 12 billion, those are such vast amounts of money, would anyone really notice a missing one billion? £30? That's a lot. £30 a week? Is that enough to buy one Google share? I'm sorry to hear your bad news. Hope you get more money, then.