Google's 3rd-quarter earnings leak early, send stock plunging

NEW YORK, N.Y. - Google Inc.'s stock plunged suddenly on Thursday afternoon after a contractor prematurely released the search company's third-quarter earnings report.

NEW YORK, N.Y. – Google Inc.’s stock plunged suddenly on Thursday afternoon after a contractor prematurely released the search company’s third-quarter earnings report.

The stock fell $68.19, or 9 per cent, to $687.30 before trading was halted to give investors a chance to digest the results. The company’s quarterly performance fell well short of analyst estimates. Google’s report had been scheduled for release after the close of regular trading Thursday.

Trading resumed at 3:20 p.m. (1920 GMT). Google stock was trading down 8.5 per cent at $691 some five minutes later.

The sell-off reflects a reversal of the optimistic sentiment that had propelled Google’s stock to a new all-time high earlier this year. The stock had surged 27 per cent in the three months before Thursday’s unwelcome surprise.

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.

In the regulatory filing, Google said it earned $2.18 billion, or $6.53 per share, during the three months ending in September. That compared with net income of $2.73 billion, or $8.33 per share, last year. The company, which is based in Mountain View, California, later confirmed the results in a press release.

The earnings would have been $9.03 per share, if not for Google’s accounting costs for employee stock compensation and restructuring charges related to the acquisition of Motorola. Analysts polled by FactSet were expecting $10.63 per share, on average.

Revenue climbed 45 per cent from last year to $14.1 billion. Excluding compensation for websites that generate traffic for Google’s ads, revenue was $11.33 billion. Analysts were expecting $11.86 billion.

Excluding this summer’s acquisition of cellphone maker Motorola Mobility, Google’s revenue rose 18 per cent.

Motorola Mobility, which Google acquired for $12.4 billion in May, played a major role in the third-quarter letdown. The device maker suffered an operating loss of $527 million, more than tripling from the same time last year when it was still an independent company.

Google is trying to improve Motorola Mobility’s performance by laying off about 20 per cent of its workforce — about 4,000 employees — and closing one-third of its 90 plants and office. Those cost-cutting resulted in $349 million in charges during the quarter.

The strong dollar may also have contributed to Google’s miss. The company said that if foreign exchange rates had been stable, its revenue would have been $136 million higher.