Updated 11:40 a.m. EDT, October 19
Google experienced a major financial glitch on Thursday, when a draft version of its third quarter earnings report was posted online at just after noon Eastern, way earlier than the 4:30 p.m. EST market closing time scheduled, causing the company’s shares to plunge over 9 percent, or about $68 per share, wiping out about $20 billion collectively for investors.
To make matters worse, the earnings were bad, really bad: Google’s net income was $2.18 billion, down 20 percent from the same time last year, when the company reported net income of $2.73 billion. Earnings-per-share were $9.03, down from the $9.72 in the third quarter of 2011.
The report was a substantial miss for Google, as investors were expecting, on average, earnings of $10.65 per share, according to Reuters.
The shortfall was caused in large part by Google’s $12.5 billion acquisition of Motorola Mobility, which actually ended up costing the company an operating loss of $151 million ($349 million was spent by Google on “restructuring costs”).
Cost-per-click of Google’s ads — the amount it sells them for — also fell by 15 percent, another worrisome sign, though overall advertising revenue was up 45 percent to $14 billion in the quarter from $9 billion in the third quarter of 2011. Cost-per-clicks have been trending down for some time, however.
Google halted trading of its shares shortly after but is expected to resume trading at 3:20 p.m. EST. The company is still expected to host a conference call to discuss its earnings at the original scheduled time of 4:30 p.m. EST.
But in a statement released on its Google Plus Investor Relations page and sent to reporters on Thursday, Google blamed its financial printer, Chicago-based publisher R.R. Donnelley, for the leak.
As Google’s statement said:
Earlier this morning RR Donnelley, the financial printer, informed us that they had filed our draft 8K earnings statement without authorization. We have ceased trading on NASDAQ while we work to finalize the document. Once it’s finalized we will release our earnings, resume trading on NASDAQ and hold our earnings call as normal at 1:30PST
TPM has reached out to R.R. Donnelley for more on what happened on its end of the situation and will update when we receive a response.
Google has since updated its filing and filled out the portions that were missing in the draft, including the following quote from Larry Page: “We had a strong quarter. Revenue was up 45 percent year-on-year, and, at just fourteen years old, we cleared our first $14 billion revenue quarter…I am also really excited about the progress we’re making creating a beautifully simple, intuitive Google experience across all devices.”
Late update: R.R. Donelley has released the following statement about its role in the situation to TIME Magazine: “R.R. Donnelly said it was ‘fully engaged in an investigation to determine how this event took place and are pursuing our first obligation — which is to serve our valued customers.'”
