Google shares sink after Q4 earnings miss Wall Street expectations

Posted:
in General Discussion edited January 2014


Shares of Google fell more than 9 percent in after-hours trading after the company missed both Wall Street's revenue and earnings expectations when it reported its fourth quarter 2011 results on Thursday.



The Mountain View, Calif., company reported 25 percent growth year over year with revenues of $10.58 billion for the December quarter. Operating income for the period was $3.51 billion, up from $2.98 billion in the year-ago quarter.



Though Google's quarterly performance still represented a sequential increase, but investors voiced concerns that its growth had decelerated from previous quarters. The company's net revenue of $8.13 billion missed consensus estimates of $8.4 billion, as tracked by Thomson Reuters.



Google stock was up $6.66, or 1.05 percent, at the close of the market on Thursday, but its disappointing quarterly results prompted a sell-off that caused shares to drop $57.67 to $581.90.



As is to be expected, Google's top brass remained upbeat about the results. CEO Larry Page said he was "super excited" about the growth of Android, Gmail and Google+, adding that its new social networking service now has 90 million users globally.



"I'm very excited about what we can do in 2012--there are tremendous opportunities to help users grow our business," Page said.



But, analysts were quick to pick up on 8 percent decline in the average cost-per-click, its first year-on-year drop in two years, for the search giant. They hounded Page with half a dozen questions about the issue during the Q&A portion of the earnings conference call, prompting the CEO to ask that the next question not be about CPCs, Reuters reported.



"The major question is: Is this a one-time thing or is this something that is going to continue because the nature of the business has changed," Colins Stewart analyst Mayuresh Masurekar said.



Company executives attributed the decline to currency exchange fluctuations and advertising format changes. But analysts feared that mobile advertising may have caused the drop in cost-per-click rates.



"This was the first time we've seen a decline in CPC rates since 2009," Needham & Co analyst Kerry Rice told the publication. "It's been a long time and the one thing that's really changed about this is mobile."



The report also noted that investors remain uneasy about Google's planned acquisition of Motorola Mobility. They are reportedly concerned that entering the low-margin hardware business could affect Google's bottom line and scare off Android vendors.



Google's results appeared even worse considering that fellow technology giants Microsoft, Intel and IBM all reported solid earnings on Thursday. Though Microsoft did note a 6 percent decline in its Windows business, it made up for it with its gaming, Office and server divisions. Intel managed to beat expectations, which had been scaled back because of a weakened PC market.



For its part, Apple is expected to report stellar earnings for the December quarter next Tuesday. Record iPhone and iPad sales are likely to drive a blowout quarter for the company.

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Comments

  • Reply 1 of 72
    Quote:

    …shares to drop $57.67.



    Drop in the bucket, really.



    Oh, before I forget, Apple Is Doomed™.
  • Reply 2 of 72




    Research firm predicts Windows Phone will climb past iPhone by 2015

    http://www.geekwire.com/2012/predict...ket-share-2015





    Enjoy this happiest moment that will never return
  • Reply 3 of 72
    aaronjaaronj Posts: 1,594member
    Quote:
    Originally Posted by Tallest Skil View Post


    Drop in the bucket, really.



    Oh, before I forget, Apple Is Doomed?.



    Well, it's still ~9% drop, and that's significant. OTOH, it will more likely than not gain that back fairly quickly.
  • Reply 4 of 72
    Quote:
    Originally Posted by AaronJ View Post


    Well, it's still ~9% drop, and that's significant. OTOH, it will more likely than not gain that back fairly quickly.



    You're right, what am I thinking? Google losing 10% of their worth in one night? Ha!



    Maybe people will finally get fed up with their nebulous numbers of OS installs now.
  • Reply 5 of 72
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by Tallest Skil View Post


    You're right, what am I thinking? Google losing 10% of their worth in one night? Ha!



    Maybe people will finally get fed up with their nebulous numbers of OS installs now.



    You do realize the same thing happened to Apple just a few months ago, right? Or are you that short-memoried?
  • Reply 6 of 72
    Quote:
    Originally Posted by cameronj View Post


    You do realize the same thing happened to Apple just a few months ago, right? Or are you that short-memoried?



    I am, thanks for reminding me. I have nonexistent short-term memory and most of my long-term ones are gone too. I went to Ireland just over three years ago and I can't remember it at all. It was either one of the best or worst times in my life.



    The difference here is that it also happened to Google then, too, and I would assume the entire market, making it irrelevant. This time it's all on Google.
  • Reply 7 of 72
    Quote:
    Originally Posted by AaronJ View Post


    Well, it's still ~9% drop, and that's significant. OTOH, it will more likely than not gain that back fairly quickly.



    That depends on whether and how the CPC from their mobile ad base gets to what their non-mobile average is (see article). And, there is the Motorola Mobility acquisition to be completed, digested, and integrated.



    I am guessing that there's lots more trouble down the road, i.e., things are probably going to get worse for Google before it gets better.
  • Reply 8 of 72
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by Tallest Skil View Post


    I am, thanks for reminding me. I have nonexistent short-term memory and most of my long-term ones are gone too. I went to Ireland just over three years ago and I can't remember it at all. It was either one of the best or worst times in my life.



    The difference here is that it also happened to Google then, too, and I would assume the entire market, making it irrelevant. This time it's all on Google.



    In that case you're wrong again. I don't get it, why do you talk?
  • Reply 9 of 72
    Quote:
    Originally Posted by cameronj View Post


    In that case you're wrong again.



    Ah, about the entire market? Fine, then. I don't follow such things.



    Quote:

    I don't get it, why do you talk?



    You listen. You deride and mock, but at least you listen.
  • Reply 10 of 72
    cmvsmcmvsm Posts: 204member
    Quote:
    Originally Posted by 845032 View Post






    Research firm predicts Windows Phone will climb past iPhone by 2015

    http://www.geekwire.com/2012/predict...ket-share-2015





    Enjoy this happiest moment that will never return



    The Windows phone will go the way of Windows Mobile. MS just loves to beta all over their potential customers, which makes this DOA before leaving the crime scene. Either way, this Google report gives the speculators and hedge fund investors an excuse to pull a few points away from Apple shares so that they can bath in the windfall of next week's report out. What a bunch of BS.



    And in other reports, Apple surges in Q3 as Android share collapses due to iPhone 4s launch. Where's that Windows 7 thing again?



    http://articles.businessinsider.com/...izon-customers
  • Reply 11 of 72
    Quote:
    Originally Posted by 845032 View Post




    Research firm predicts Windows Phone will climb past iPhone by 2015

    http://www.geekwire.com/2012/predict...ket-share-2015





    Enjoy this happiest moment that will never return



    Reposting reply from Microsoft thread:



    This could be not too far stretched. Sooner or later there will be no more room for Innovation in smartphone industry and they will inevitably become commodity products.



    In the long run whoever has a better ecosystem, cloud services, navigation, and search will win the war. I am afraid Google is better positioned so far. Not sure about Microsoft and Apple.

    Like I said in one of the recent threads, Apples must acquire Wolfram to build a new kind of search engine, a really intelligent one, so that iOS users would not ever feel need googling anymore and bringing revenues to one of the primary competitors.

    I also think it was a mistake they let Yelp to go IPO. Now it is too expensive as a strategic acquisition target.

    I hope Apple is preparing some surprises for us in a form of new maps and navigation software (based on C3 tech and other acquisitions).



    This will make the ecosystem accomplished and ready for the fight.
  • Reply 12 of 72
    Quote:
    Originally Posted by 845032 View Post






    Research firm predicts Windows Phone will climb past iPhone by 2015

    http://www.geekwire.com/2012/predict...ket-share-2015





    Enjoy this happiest moment that will never return





    ROFL poor little Android sh%^head. this must be a sad day for you.
  • Reply 13 of 72
    It always amazes me that when the analysts screw up with their forecasts, the company gets punished. It seems it should be the other way arround
  • Reply 14 of 72
    shompashompa Posts: 340member
    Google shareholders should be angry at Googles management.



    Android is great and have a huge market share. It just don't make any money for Google. I would have been cheaper for Google to continue buy Google search on others smart devices.

    Spending 20 billion on Android and have revenue 1 billion.



    Next company to have similar drop in value is Amazon. They are happy that Kindle Fire sells well, but they loose money on each device. Stupid business strategy.



    As for Apple shares? They have the traditional rise before the report. Almost all the times Apple drops after the report since "analytics" always find something to harp about. They have already prepared 3 things to harp about.

    1) Lower then expected mac sales. While the market shrank Apple only increased 15+%

    2) Lower then expected Ipad sales. Many have said that Apple will sell 13+ million. If Apple sells 12.9: Apple is doomed.

    3) Lower then expected Iphone sales. They have inane numbers of 36 million phones. If Apple "only" sells 31 million. "Apple misses Iphone with 5 million". It would make Apple the world largest smartphone maker, but annuity's don't care. Its all about market share. just like the .com bubble.



    BTW. I will laugh if Apples profit is larger then Googles total revenue. Apple have a good chance of producing does numbers. Just to have "huge" Google in perspective with "small" Apple.



    I would laugh even more if Apple did the best search engine in the world just to repay Google for cloning Iphone.
  • Reply 15 of 72
    It's about time Google got spanked by Wall Street. They've been the most overly valued IPO since it's inception.
  • Reply 16 of 72
    Quote:
    Originally Posted by 845032 View Post






    Research firm predicts Windows Phone will climb past iPhone by 2015

    http://www.geekwire.com/2012/predict...ket-share-2015





    Enjoy this happiest moment that will never return



    We're in 2012, kid. The 2011 projects aren't meeting reality. They have < .25% of the smartphone market, if that. The fantasy has the Jan 2012 target of 10%. Try some other profession.
  • Reply 17 of 72
    Quote:
    Originally Posted by Tallest Skil View Post


    Ah, about the entire market? Fine, then. I don't follow such things.



    You listen. You deride and mock, but at least you listen.



    I'm not sure what the other poster is saying but just to let you know AAPL and GOOG have pretty much mirrored each other for the last year, when GOOG rises AAPL rises; when one drops the other drops... exept for last April around the middle of the month and January 2012... GOOG and AAPL have uncoupled during those times.
  • Reply 18 of 72
    shompashompa Posts: 340member
    Quote:
    Originally Posted by jason98 View Post


    Reposting reply from Microsoft thread:



    This could be not too far stretched. Sooner or later there will be no more room for Innovation in smartphone industry and they will inevitably become commodity products.



    In the long run whoever has a better ecosystem, cloud services, navigation, and search will win the war. I am afraid Google is better positioned so far. Not sure about Microsoft and Apple.

    Like I said in one of the recent threads, Apples must acquire Wolfram to build a new kind of search engine, a really intelligent one, so that iOS users would not ever feel need googling anymore and bringing revenues to one of the primary competitors.

    I also think it was a mistake they let Yelp to go IPO. Now it is too expensive as a strategic acquisition target.

    I hope Apple is preparing some surprises for us in a form of new maps and navigation software (based on C3 tech and other acquisitions).



    This will make the ecosystem accomplished and ready for the fight.



    Why can't Apple continue to use Google search? Its a great search enginge and Google pays Apple huge money for it. Apple is not about advertising. Data mining its customers is something that goes against Apple DNA.



    Apples GPS/maps will be introduced with iOS 6.

    NFC should also be introduced in iOS 6.



    Windows mobile will continue to play catch up. They aren't even multi threaded, something that Unix have been since late 1960. Windows phone will never succeed unless MSFT starts to play Xbox and eat huge losses. MSFT history is that they have never succeeded in a market there they have competition.



    Users needs to be educated about how Google data mines Android/their cloud service. Just last night I could not send some files to my friends Gmail account. Google unrared the files and decided that they did not want those files to be delivered to their mail. Google have automatic scrips that checks all mail and if they don't like the mail, they bounce it.



    The file I tried to send did not have a virus o violated Googles official rules for mail. It was plain censorship since they didn't like the mail file.



    Google uses will also start to tire that they don't get OS updates. "buy a new phone" is just arrogant. And how fun is it to spend hundreds of dollars in apps and many wont work on you new Android phone. Especially if you change from different Android vendors.



    Every single Android user I know are geeks/uneducated/don't care: want a cheap phone/hate Apple. The "hate Apple" is huge in persons under 20 years old. Google have really managed to brainwash people. Evidence: Chrome. Most users says that Safari sux but Chrome rulez. They both uses the same engine. They have no clue...



    I miss Steve.

    His letter about Adobe was spot on and 2011 proved him right with the death of non open standards like Flash and Silverlight.



    Steve would write a great open letter about what's wrong with Android.
  • Reply 19 of 72
    radjinradjin Posts: 165member
    By the next earnings call Apple may have enough cash in the bank to buy all the competition and still have enough to take us all out to lunch.
  • Reply 20 of 72
    Quote:
    Originally Posted by 845032 View Post






    Research firm predicts Windows Phone will climb past iPhone by 2015

    http://www.geekwire.com/2012/predict...ket-share-2015





    Enjoy this happiest moment that will never return











    this is already wrong. iOS killed Android in the 4th quarter, but the graph doesn't show that.
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