Tech titan Google suffered an embarrassing financial episode last night, as its shares were suspended for two-and-a-half hours following an accidental early release of its third-quarter earnings.
The company’s profits fell by 20 per cent from the same period last year to $2.18 billion (£1.35 billion), coming in below analysts’ expectations. This sparked a nine per cent decline in Google shares as trading in the stock was suspended, before a marginal recovery after business was resumed left the value eight per cent lower by the end of the day.
The crash came after the search giant submitted its results statement three-and-a-half hours ahead of schedule, in a release that was clearly accidental. A draft was filed with the Securities and Exchange Commission at 09:30 Pacific time (16:30 GMT) with the heading “PENDING LARRY QUOTE”, with CEO Larry Page yet to have added his customary excerpt which may have allayed some fears and prevented damage to the company’s stocks on the market.
But the premature news, escaping before media briefings or statements to traders could be delivered, sent panic through investors and drove the nine per cent slump. The report error thus shaved an incredible $19 billion (£11.84 billion) off Google’s value in a matter of hours.
Pointing the finger at printing firm RR Donnelly when the report first emerged, Google said in a statement, "Earlier this morning 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 PST."
When the final call did arrive, CEO Page had indeed added some gloss, saying, "We had a strong quarter. Revenue was up 45% year-on-year, and, at just fourteen years old, we cleared our first $14bn revenue quarter.
"I am also really excited about the progress we're making creating a beautifully simple, intuitive Google experience across all devices."
Net revenue rose to $11.3billion (£7.04 billion) from $7.5billion (£4.67 billion) over the period, but was nevertheless below forecasts.
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