Google profit, sales miss analysts’ estimates
GOOGLE Inc reported profit and sales that missed analysts’ estimates, a signal that its tools are becoming less valuable to advertisers as more users access the world’s largest search engine via mobile devices.
Third-quarter profit excluding some items was US$9.03 a share, Google said in a filing. Excluding sales passed to partner sites, revenue was US$11.3bil. Analysts on average had estimated profit of US$10.65 a share on sales of US$11.8bil. The stock tumbled after the results were inadvertently released early, and clung to its losses after a temporary trading halt.
The average amount advertisers paid each time a user clicks on a promotion declined about 15% from a year earlier, and was 3% less than the prior period. An increase in the number of people who access Google on tablets and smartphones is crimping sales because ad fees on the smaller screens cost about half as much as on desktop computers, said Colin Gillis, an analyst at BGC Partners LP.
“Click prices declined again for the fourth consecutive quarter,” Gillis said. “The core business itself is slowing down.”
A statement in the filing – which was issued hours before the company had planned to report earnings – has a line at top that says: “Pending Larry quote.” Google blamed R.R. Donnelley & Sons Co, a company that handles financial printing, for the premature release.
Shares of Mountain View, California-based Google sank 8% to US$695 at the close in New York, and earlier dropped as much as 11% to US$676 before the company asked Nasdaq OMX Group Inc to halt trading.
The stock has gained 7.6% this year. R.R. Donnelley fell less than 1% to close at US$10.76, following an earlier drop of 6.5%.
Amid increased mobile use, the number of clicks rose 33% , less than the average 34% gain anticipated by analysts, according to data compiled by Bloomberg.
So-called sites revenue, which includes ads tied to key word searches, grew 15% to US$7.73bil from the same period a year earlier, less than half the growth Google reported in the third quarter of 2011. – Bloomberg