Surprise early announcement sees 9% share price fall, leading to a temporary suspension of trading in the Internet giant.
Surprise early announcement sees 9% share price fall, leading to a temporary suspension of trading in the Internet giant.
Poor results have been the hallmark of this quarter in the Technology sector, with huge companies such as Intel, AMD and even Apple announcing substantial drops in profits. Few have thus far bucked the trend, and Google’s early earnings announcement today showed that the California-based monster followed the downward slope. In an earnings release to Reuter’s erroneously posted earlier than intended, third-quarter profits fell 20% on a year earlier to $2.18bn (£1.35bn). This figure was short of analysts expectations, expectations which were presumably due to a belief in Google’s lesser reliance on hardware sales, and led to a 9% price fall in late trading on the NASDAQ.
Motorola, a recent Google acquisition, lost $512m (20% of revenues) in the same quarter. Google CEO Larry Page is expected to make a statement shortly, and they have taken the decision to suspending share trading until that time.
This caps a poor week for the sector, with Intel on Tuesday announcing a profit fall of some 14% to $2.49bn on the back of $13.46bn in sales (-5.5%) and AMD announcing a worse than expected revenue decline of as much as 10% for this quarter. Intel and AMD at least have the launch of Windows 8 to look forward to; the new Microsoft OS is expected to stimulate hardware sales significantly for the final quarter of the year.
The direct causes of this downturn haven’t been ascertained, but an overall weakness in demand worldwide must surely be a factor. A pronounced downturn in the Eurozone and any slacking of the emerging economies will be worrying to each of these companies, with AMD especially in dire straits and needing to return to profitability.
Google’s share price dip once again puts them below Microsoft in overall value, whom they briefly supplanted last month.
Sources: BBC News, 2, Guru3D
