Google reveals Q3 letdown early, stock plummets
October 20, 2012, 12:06 am TWN
SAN FRANCISCO -- As far as unpleasant surprises go, Google hit Wall Street with a double whammy Thursday.
The Internet search leader that prides itself on organizing the world's information lost control of its own data when a contractor released its third-quarter earnings report more than three hours before the numbers were supposed to come out.
As if that wasn't jarring enough, the results alarmed investors because the company's earnings and revenue fell well below analyst projections. The disappointment triggered an 8 percent drop in Google's stock price that erased about US$20 billion in shareholder wealth.
"This is a monumental failure of epic proportions," said Michael Robinson, an executive vice president for the Levick Strategic Communications, which specializes in financial crisis management. "This was bad news compounded by bad process. It came out in the worst way possible."
Google Inc. 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.
The embarrassing mix-up prompted Google CEO Larry Page to preface his review of the quarter with an apology during a conference call with analysts.
"I am sorry for the scramble earlier today," Page said, still sounding hoarse from a mysterious throat ailment. The problem left Page unable to speak during the summer, causing him to skip Google's second-quarter earnings call three months ago.
Page went on to paint a bright picture, not only of the most recent quarter, but for the next few years. "Every day, I wake up and I am delighted about our opportunities to keep growing," he said.
The pep talk didn't immediately resonate with investors.