Last night, Google shares were suspended after an accidental email to the US stock market revealed that Google’s quarterly results were far below Wall Streets’ demanding expectations. This left the company with no choice but to suspend trading.
The financial release, which was sent out, began with the words ‘Pending Larry’s Quote’- Larry, being Google’s chief executive, Larry Page ,who usually takes the role of putting the best *gloss* on the financial figures.
Not a great move for Google, in a quarter where they’ve failed to live up to the high expectations put on the company. Google didn’t have the chance to either explain the results or suggest how they would improve in the future thus sending everyone into panic.
We’ve all sent a text, or an email *too* early and the outcome is unlikely to have caused such pandemonium, as the printers did for Google. Thankfully, leaks like this are extremely rare, but Google is blaming the financial printer RR Donnelly for filling its draft report without authorisation. Of course, the situation was a lot worse than it could have been in previous years, as the company has missed expected profits and showed a massive slow down in revenue growth.
Markets really don’t like surprises! These results being published three hours early is certainly a surprise- and not a good one at that! Google is now working on the back foot, trying to reassure the markets and give some context to the figures.
Figures showed that Google earned $9.03 per share in the third quarter – notably below analysts’ consensus estimates of $10.63. Its search engine revenues were also below expectations, hitting $11.5bn (£7bn) where analysts had expected it to show $11.9bn (£7.38bn).
The figures still showed 19% growth from the same period, but of course a significant fall considering Google has been growing since 2009.
Why the problem?
• Fall in cost per click- amount that advertisers pay when people click on Google adverts.
• Mobile phone use is significantly higher than ever before.
• Advertising rates for mobile phones are typically lower than desktop rates.
• People are now discovering new content via apps and other methods leading to less use of search
What does the future hold for Google?
So it doesn’t sound great, but it’s Google – Google is THE ultimate search engine, right? The vice president of eMarketer, Clark Fredricksen, said that despite this setback, he feels that Google is in a strong position because of it’s underlying strength. Google remains dominant in search, with a 74.5% share of the US search ad market, according to eMarketer. In Europe, its market share is fortunately more than 95% – and the overall digital advertising market in the US grew by 17.7% in the third quarter of 2012.
He added,”The company now holds the largest revenue in the US search, display and mobile advertising markets, respectively – and the company’s market share in each category is expected to grow in the coming years. Particularly in the mobile arena, Google holds a commanding lead over all other players, taking home more than half of all US mobile ad revenues.”
Printers are currently investigating to determine how this event took place.
How do you make a bad day worse?
It has also been reported that Google’s YouTube video sharing service was hacked yesterday. YouTube users saw an error message when they visited the website and the bizarre wording suggested it was the work of hackers:
YouTube quickly posted on Twitter saying the engineers were quickly working to fix the mistake. YouTube is now up and working. Cheers “monkeys!”