It’s not that Google didn’t increase revenues or make a profit – it’s that both figures came in below Wall Street expectations, leading to a sell-off that ended up with the stock being pulled off the market.
The results were supposed to be made public after the markets closed, but were filed publicly with the SEC around noon, with a space-saver inserted at a certain point for still-to-come remarks from CEO Larry Page.
According to MarketWatch, revenue (minus traffic acquisition costs) was $11.33B compared to $7.51B a year prior. Profits were comparably down, however, coming in at $2.18B or $6.83/share compared to $2.73B or $8.33/share.
Adjusted profit was $9.03/share – which didn’t measure up to the consensus $10.63/share analysts were looking for.
The results were released early, and set off a selling frenzy.
Anthony DiClemente of Barclays Capital expressed his firm’s belief that problems with Motorola Mobility were the primary cause of the missed expectations. DiClemente noted that Motorola Mobility suffered a 21% decline in revenue YOY, creating the drag that brought down Google’s overall results.
DiClemente said that perhaps it wasn’t the results that were out of sync with what should have happened – it’s the predictions that didn’t see the reality for what it was. And that opens up an opportunity.
“However we believe 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 MMI drag on the business,” he said.
However, if investors didn’t act fast, they didn’t get a chance – it was off the market before 1PM.