Update: Trading of Google has been halted at the company’s request.
Second Update: Google is blaming a simple mistake on the early release of its earnings: “Earlier this morning RR Donnelley, financial printer, informed us they filed our draft 8K earnings statement w/o authorization,” quotes @Tim. Bloomberg confirms: “BREAKING: #Google blames RR Donnelley for premature earnings release. $GOOG#tech.”
Today Google announced its quarterly earnings, reporting some $14.10 billion in revenue and earnings per share of $6.53. The market reacted negatively, sending the company’s stock down quickly. Google fell some 8% nearly instantly following the release. At its lowest point, Google was down 13%.
Here’s the current chart of its decline, before the halt.
Google’s GAAP operating income as a percentage of its total revenues was down sharply in the quarter:
GAAP operating income in the third quarter of 2012 was $2.74 billion, or 19% of revenues. This compares to GAAP operating income of $3.06 billion, or 31% of revenues, in the third quarter of 2011.
Net income was also down on a yearly basis, comparing the relevant quarters of 2011 and 2012. For this quarter, Google reported net income of $2.18 billion. In the third quarter of 2011, net income was some $2.73 billion. The full Google earnings release can be found here.
What was the cause of the decline? At least partially, Motorola:
Motorola Operating Loss – GAAP operating loss for Motorola was $527 million ($505 million for the mobile segment and $22 million for the home segment), or -20% of Motorola revenues in the third quarter of 2012. Non-GAAP operating loss for Motorola in the third quarter of 2012 was $151 million, or -6% of Motorola revenues.
For more on the Motorola brouhaha, head here.
Interestingly, operating expenses stayed constant at 34% of revenue, not changing on a percentage basis since the year-ago quarter. Charges related to stock based compensation ticked higher in the quarter.
What follows is the meat of Google’s earnings release:
Google Inc. reported consolidated revenues of $14.10 billion for the quarter ended September 30, 2012, an increase of 45% compared to the third quarter of 2011. Google Inc. reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the third quarter of 2012, TAC totaled $2.77 billion, or 26% of advertising revenues.
Operating income, operating margin, net income, and earnings per share (EPS) are reported on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures at the end of this release.
GAAP operating income in the third quarter of 2012 was $2.74 billion, or 19% of revenues. This compares to GAAP operating income of $3.06 billion, or 31% of revenues, in the third quarter of 2011. Non-GAAP operating income in the third quarter of 2012 was $3.80 billion, or 27% of revenues. This compares to non-GAAP operating income of $3.63 billion, or 37% of revenues, in the third quarter of 2011.
GAAP net income in the third quarter of 2012 was $2.18 billion, compared to $2.73 billion in the third quarter of 2011. Non-GAAP net income in the third quarter of 2012 was $3.01 billion, compared to $3.18 billion in the third quarter of 2011.
GAAP EPS in the third quarter of 2012 was $6.53 on 333 million diluted shares outstanding, compared to $8.33 in the third quarter of 2011 on 327 million diluted shares outstanding. Non-GAAP EPS in the third quarter of 2012 was $9.03, compared to $9.72 in the third quarter of 2011.
Non-GAAP operating income and non-GAAP operating margin exclude stock-based compensation (SBC) expense, as well as restructuring and related charges recorded in our Motorola business. Non-GAAP net income and non-GAAP EPS exclude the expenses noted above, net of the related tax benefits. In the third quarter of 2012, the expense related to SBC and the related tax benefits were $715 million and $155 million compared to $571 million and $116 million in the third quarter of 2011. In the third quarter of 2012, restructuring and related charges recorded in our Motorola business were $349 million, and the related tax benefits were $76 million.
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