Google posted a third-quarter profit of $2.18 billion, or $6.53 a share, down from $2.73 billion, or $8.33 a share, a year earlier. Excluding stock-based compensation and other items, profit fell to $9.03 from $9.72 a share. Revenue, excluding traffic acquisition costs, improved to $11.33 billion.Google had been on a roll. It continues to dominate Internet search and Internet advertising. Smartphones that use the Android operating system outnumber everyone else's. Well-publicized missteps by its rivals made it seem like we were in the age of Google, not Apple or Facebook.
Analysts surveyed by Thomson Reuters expected earnings of $10.65 a share and net revenue of $11.86 billion.
Total costs jumped 71%.
Until today.
Net income per share, excluding stock-based compensation and other items, fell 7.2% versus the same quarter last year, instead of rising 9.6% as the analysts expected. The disappointing results sparked reassessment, and the stock fell 8%.
Sidebar: a big "oops" moment occurred when financial printer R.R. Donnelley & Sons disclosed the results three hours before the market closed:
The premature posting rattled markets, and led to a 2½-hour halt in trading of Google shares from 12:50 p.m. to 3:20 p.m. ET.Believers in the semi-strong form of efficient capital markets may be cheered by this example of how quickly Google shares adjusted to the "right" price. Trading was halted for 2½ hours to allow market participants to digest the new information, yet the price remained about the same after trading resumed.
Flashback: nine months ago Google had a negative earnings surprise, and the stock fell $53.58 (8.3%) to $585.99. That would have been an excellent time to buy: GOOG is 19% higher, even after today's drop. I still have no idea whether it's a good investment.
Disclosure: I have positions in Apple but not in Google or Facebook.
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