Google accidentally released its Q3 earnings a few hours early, and the results were shocking to most; the tech giant reported a 20 percent drop in profits, resulting stock prices falling 9 percent in the minutes following the release.
The Washington Post is reporting that the earnings releases were posted to the Securities and Exchange Commission Web site a few hours earlier than anticipated. Google ceased trading on NASDAQ following the release while it finalized the document, which was initially posted with a note stating it was “Pending Larry quote.” Google reported revenue of U.S.$11.3 billion in Q3, which was up 19 percent year-on-year, but net income fell to U.S.$2.18 billion. Part of the company’s decline is blamed on foreign currency exchange rates, while another part is blamed on Google’s Motorola unit, which reported an adjusted operating loss of U.S.$151 million.
Yankee Group Research VP Carl Howe comments
“I think Google is discovering that its advertising-supported business model has limits to growth. The price that advertisers pay per click declined 15 percent over the same quarter last year, and that was the fourth quarter in a row where that figure declined. Because advertising is what pays the bills for everything else at Google, that decline has to be creating red flags for its business.
Google also is learning that the mobile smartphone business is a tougher business to dominate than it expected. While Android has captured the majority of smartphone shipments, Google had been making more money off Apple’s iPhone owners than Android owners, and Apple is in the process of migrating those owners away from Google services. Worse, Google’s own Android manufacturing arm, Motorola Mobility, is losing money selling Android phones. While Android may be capturing the lion’s share of mobile smartphone market, the fact that Google is not making money in that market has to be considered a Pyrrhic victory at best.”
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