Google's bad-news earnings slip, stock falls
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As far as unpleasant surprises go, Google hit Wall Street with a double whammy Thursday.
The Internet search-engine leader, which prides itself on organizing the world's information, lost control of its own data when a contractor released Google's third-quarter earnings report more than three hours before the numbers were supposed to come out.
As if that weren't jarring enough, the numbers 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 $20 billion in shareholder wealth.
"This was bad news compounded by bad process," said Michael Robinson, an executive vice president for the Levick Strategic Communications, which specializes in financial crisis management. "It came out in the worst way possible."
"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.
Google's stock dropped $60.49, or 8.01 percent, to close at $695.
The sell-off reflects a reversal of the optimistic sentiment that had propelled Google's stock to a new all-time high earlier this month. The stock had surged 27 percent in the three months before Thursday's unsettling developments.
Google earned $2.18 billion, or $6.53 per share, during the three months ending in September. That compared with net income of $2.73 billion, or $8.33 per share, last year.
But there were also some worrisome signs in Google's main business of selling online advertising. Google's ad revenue rose 16 percent from the same time last year, the slowest pace in three years.