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Google revenue misses Wall Street targets, shares down sharply

Thursday, January 19, 2012 · 4:38 pm · 40 Comments

“Google Inc’s net revenue jumped more than 27 percent in the fourth quarter but fell short of Wall Street targets, sending shares down sharply in after hours trading on Thursday,” Alexei Oreskovic reports for Reuters. “Shares of Google were down 10 percent at $575 in after-hours trading.”

“Google’s net revenue, which excludes fees shared with partner websites, was $8.13 billion in the fourth quarter, versus $6.37 billion in the year-ago period,” Oreskovic reports. “Analysts polled by Thomson Reuters I/B/E/S were looking for net revenue of $8.4 billion.”

Full article here.

Categories: News

Tags: finance, GOOG, google

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Comment Feed

40 Comments

breeze

Thursday, January 19, 2012 - 4:42 pm · Reply

A trend that will hopefully grow as Apple breaks new ground.
IMaps coming g man.
Randian

Thursday, January 19, 2012 - 4:47 pm · Reply

Make no mistake: I am NO fan of EricTMole and the copy-cats at Google. In fact, I loathe them, one and all.

However . . . this Wall Street game of clobbering an equity whose company earnings jump 27% Y-O-Y (?)–just because it didn’t meet THEIR guesstimates–is criminal. All these anal-ysts have to do is inflate their expectations for a given earnings period . . . and then clean up when the company doesn’t “come through” enough.

Solid, respectable profit growth is simply not enough any more. It must conform to some a**hole’s opinion of what it SHOULD have been . . . OR ELSE!
- temprakneeoh
  
  Thursday, January 19, 2012 - 4:49 pm · Reply
  
  100
- wandering Joe
  
  Thursday, January 19, 2012 - 4:49 pm · Reply
  
  Agreed!
- Braddy
  
  Thursday, January 19, 2012 - 4:51 pm · Reply
  
  Well said.
- Thomas65807
  
  Thursday, January 19, 2012 - 4:53 pm · Reply
  
  Criminal? Really? The price of Google yesterday reflected a belief that Google revenues would be $8.4 billion … then today investors received new information — that revenues fell $300 million short. That means the company is less valuable today.
  
  If you think investors are being short-sighted, then you could step in and buy their stock at ‘discount’ price. And if you’re right, you’ll be rewarded for your insight.
  - Randian
    
    Thursday, January 19, 2012 - 5:51 pm · Reply
    
    Yes, Thomas, CRIMINAL.
    
    The foundation of these “beliefs,” to use your term, is based on no valid, concrete, verifiable data whatsoever. (Anal-ysts had better NOT have hard-and-fast numbers in their hands, for that is insider trading and a breach of fiduciary responsibility!) Therefore, all price-setting by anal-ysts is their guess, their “belief,” their prognostication . . . their hocus-pocus so-called research! Nothing more. Period. And what is to prevent them from (intentionally?) setting their “estimates” too high, too low, or too in-between to benefit themselves and their clients? NOTHING! Pish-tosh on “reputations,” for if anal-ysts make money for their clients, personal integrity be damned.
    
    Is this happening today? COULD it, given the strict and draconian oversight of the SEC? (Sacrcasm here.) Let Enron, Madoff, Stanford, Rajaratnam, Countrywide, Kozlowski, MF Global, ad infinitum answer that question.
    - Ansel
      
      Thursday, January 19, 2012 - 6:55 pm · Reply
      
      Horse-Pucky ……
      
      Investors are free to select and do their own homework …..
      
      And …..
      
      Not all the analyze guys were positive …. There was some of them there Bear Guys out there as well …..
      
      Just this time the longs got handed their shorts – sorta speak!
    - KenC
      
      Thursday, January 19, 2012 - 7:16 pm · Reply
      
      The stock price is affected by information.
      
      If analysts predict slow growth and underestimate the actual results, in theory, the price rises slowly, and then goes up when earnings come out. You get the price going up a little during the quarter, and up a little at earnings. No big deal.
      
      When analysts predict strong growth and overestimate the actual results, in theory, the price rises quickly, and then resets lower when actual earnings come out. So, you get the price going up a lot during the quarter, and dropping a bit at earnings. The net result should be somewhere the same, no matter how they got there. In actual practice, the markets often overreact, particularly when actual results miss estimates, like Google this quarter and Apple last quarter. This tends to correct over time.
      - deasystems
        
        Thursday, January 19, 2012 - 11:38 pm · Reply
        
        This is not an “overreaction” in respect to Google: Its earnings growth year-over-year barely exceeded the rate of inflation–a ominously bad performance by an unfocussed company. It seems to me the market has not reacted enough!
      - LordRobin
        
        Friday, January 20, 2012 - 8:23 am · Reply
        
        The net result should be somewhere the same, no matter how they got there.
        
        Be that as it may Ken, stock investors make money off movement. Longs make money when a stock goes up, and shorts make money when the stock goes down. So there is great incentive to manipulate a stock into a great climb followed by a correcting plunge, rather than allow it to grow slowly and surely.
        
        ——RM
- Ryan H
  
  Thursday, January 19, 2012 - 5:11 pm · Reply
  
  I have no problem with your premise, but it misses some factors. Analysts don’t just pull numbers out of thin air. They gather lots of data and compile into a model they believe is best at estimating how much a company earned in a quarter. An analyst must also disclose in their projections if they have any stake in said company. If an analyst is consistently way off, they will lose clout and earn less money.
  
  As someone pointed out above the price for Google yesterday was based on a market held belief of earnings of $8.4 billion. If they didn’t earn that much (even though they still performed very well), then they aren’t worth the price that was paid for them yesterday.
  - Randian
    
    Thursday, January 19, 2012 - 6:04 pm · Reply
    
    I’m with you completely, Ryan . . . IN THEORY. But if all respected anal-yst data are well-researched, carefully compiled, and honestly proffered to clients and the public at large, WHY ARE SO MANY OF THEM SO FAR OFF OF ACTUAL RESULTS?
    
    Every quarter, many (MANY!) anal-ysts’ predictions are off by as much as 100% of actual results! (It happens to AAPL all the time, for I’ve held that equity in large chunks since 1984 when the Mac came out.)
    
    If all anal-ysts are using good, solid, factual, honestly-obtained evidence–with no “opinion” or manipulative gestures involved whatsoever–how can they, as a whole, be so diversified in their predictions? Facts are facts, numbers are numbers . . . so what is the source of the disparity, if not some kind of lemonade stream in fantasyland? (Being more generous than before.)
    
    I remain unabashedly skeptical of this market, its technicians, and, unfortunately, my participation therein.
    - Gregg Thurman
      
      Thursday, January 19, 2012 - 6:39 pm · Reply
      
      How can analysts be so collectively wrong? That’s easy to answer. Unlike 99% of other publicly traded firms Google does not provide any guidance to the market on what THEY believe they will make.
      
      Nobody knows better than management how they are going to perform, yet Google does not share that information. So, unlike the firms that analysts also cover, they truly are shooting the in the dark. Don’t blame the analysts, blame Google.
      
      So if investors bid Google up to much, based on estimates that aren’t made on best evidence (management’s guidance), then when results are reported, that are not in line with analysts’ estimates, the equity will take a beating.
      
      The entirety of this “problem” lays at Google’s feet.
    - KenC
      
      Thursday, January 19, 2012 - 7:20 pm · Reply
      
      Apple is a bit of a special case, as it’s a HUGE company growing at record-breaking rates. It’s easy to underestimate Apple, when sales of a product are growing at 100%+.
      
      A lot of analysts’ firms make no markets in the stocks covered, so they have no incentive to game the system. A lot of analysts are just dumb, are required to follow lots of companies and thus don’t pay as close attention as they should, and don’t understand Apple, but cover it. You only need to read some of their stuff to realize they just don’t get it. That’s why their work is so often rubbish, their analysis is too superficial. They don’t have to be manipulative greedy sods, they just have to be stupid.
- Alex
  
  Thursday, January 19, 2012 - 6:08 pm · Reply
  
  Earnings only jumped 6% not 27%. Problem is Google and many other companies are traded at ridicules high multiples assuming 25% earning growth over the next five years. Naturally, investors get scared when they see 6% because it implies that the real value of Google is substantially less than what it is currently valued at. Again 25% expected growth vs. 6% actual growth. What is interesting Google is traded at significantly more attractive multiples that Apple despite the fact that Apple has much more cash reserves (AAPL has $95 per share) and Apple also is also not acquiring Motorola for $13Bn which should massively decrease Google value and multiples.
- deasystems
  
  Thursday, January 19, 2012 - 6:12 pm · Reply
  
  That isn’t the problem, Randian: Google’s revenue may have increased 27% year-over-year but its earnings, (i.e. net profit) increased only 5% YoY. Both numbers missed forecasts but the earnings miss is particularly egregious. THAT is why Google’s stock got hammered, and it couldn’t happen to a nicer bunch of guys…
- KenC
  
  Thursday, January 19, 2012 - 7:10 pm · Reply
  
  Look, a quarter ago, Google was trading at $580. Google closed at $640 today, up $60. That’s partly based upon macro effects as the market is up 8.5% in that time period as well as analyst estimates being positive. Now, when the actual results come in, the price responds relative to estimates.
  
  In your conspiracy theory, when analysts raise estimates, typically the price responds in a positive fashion. Now, when the actual results don’t match the estimates, the stock responds negatively. It’s all RELATIVE.
  
  As for “solid, respectable profit growth”, that is typically reflected in a stock’s PE multiple. Google is being rewarded. Their PE is around 22.
  
  It’s Apple that is a puzzler. Their PE is 1/3rd less than Google’s, at around 15, but they have twice the growth rate!
Sucker

Thursday, January 19, 2012 - 4:50 pm · Reply

Translation: Google had a fantastic quarter. Wall Street still punished them.

Even a business icon such as former General Electric CEO Jack Welch realized this was crazy, “On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy…your main constituencies are your employees, your customers and your products. Managers and investors should not set share price increases as their overarching goal…Short-term profits should be allied with an increase in the long-term value of a company.”
- deasystems
  
  Thursday, January 19, 2012 - 6:21 pm · Reply
  
  Google had a TERRIBLE quarter–its earnings were up only 5% year-over-year. Among the reasons were lower revenue per click and sharply increased operating expenses. The price per share of GOOG was very high based on high expectations, Google fscked up, and now its stock is being appropriately adjusted.
  
  (Note that Apple’s earnings have regularly been up 35 – 75% year-over-year quarter after quarter for many years now. Google looks pitiful in comparison yet its stock is treated much more favorably by Wall Street than Apple’s.)
- Gregg Thurman
  
  Thursday, January 19, 2012 - 6:45 pm · Reply
  
  “Translation: Google had a fantastic quarter. Wall Street still punished them.”
  
  No. They did not. There is much, much more to a successful quarter than just revenue growth. Google succeeding in raising revenue, but failed badly in most other aspects of managing the Company. If you haven’t done so already, read Google’s 10Q. It’s only about 60 pages long, but it details all aspects of the management (from a financial perspective) of the Company.
- qka
  
  Thursday, January 19, 2012 - 9:01 pm · Reply
  
  Good old Neutron Jack – playing the game with one face while criticizing it with the other.
OpenMinde

Thursday, January 19, 2012 - 4:51 pm · Reply

It happens earlier than I expected. I expected one year after Google closing Motorola deal, Google will tank. Google’s executives really did their jobs well ahead of time.
dddd

Thursday, January 19, 2012 - 4:52 pm · Reply

I totally called this… I convinced 2 family friends to sell 1/2 their google holdings for AAPL 2 weeks ago. I was a bit scared about the timing, but confident that AAPL is the better long term hold. NOW I’m the HERO!!!

Reuters you complicit pigs – you fscked a lot of people.
dddd

Thursday, January 19, 2012 - 4:55 pm · Reply

This is not solid growth – this Internet is also growing. Google is failing to Monetize anything but search ad revenue. If they chop off android and their 1000 beta projects, investors would not punish them for being a 1 trick pony.

If Android is beating iOS, why isn’t google doubling its revenue like Apple? Failure to answer this question explains why analysts and investors are pissed.
- breeze
  
  Thursday, January 19, 2012 - 5:10 pm · Reply
  
  Agreed
HughB

Thursday, January 19, 2012 - 5:07 pm · Reply

Profit only up 27%. Seems good to me, but when Apple comes out with its 35% soon we will see AAPL drop as well. Seems these companies have to exceed all the wild estmates to go up. I am buying GOOG first thing tomorrow. It will recover shortly. It would mot hurt to short AAPL if you are a day trader. Just my $.02.
- breeze
  
  Thursday, January 19, 2012 - 5:12 pm · Reply
  
  Short at your own risk, one of these moments Apple will take off so big that you’ll never short anything again.
  - HughB
    
    Thursday, January 19, 2012 - 5:30 pm · Reply
    
    I am long 1000 AAPL Breeze. But I am planning to short a couple hundred before the report. Almost fails to drop regardless of report. Try it, you will like it buddy.
    - breeze
      
      Thursday, January 19, 2012 - 5:52 pm · Reply
      
      I know what I like and I have my principles. That’s why Apple.
  - breeze
    
    Thursday, January 19, 2012 - 5:54 pm · Reply
    
    Play with your with your own money… You might like it too…
- dddd
  
  Thursday, January 19, 2012 - 5:32 pm · Reply
  
  NET revenue is up by 27% – I don’t see anything about profit margin. It would be suicide to short AAPL. Apple’s revenues are going to be up 40-55%. Google has always had a higher profit margin than apple – ads versus hardware manufacturing. Your .02 is not worth 2 cents.
- deasystems
  
  Thursday, January 19, 2012 - 6:25 pm · Reply
  
  No, Hugh–*revenue* is up 27% but profit was up only 5%. Google really screwed up.
  
  Buy GOOG at your own risk. I think there’s more bad news to come for this collection of clowns and thieves…
- KenC
  
  Thursday, January 19, 2012 - 7:27 pm · Reply
  
  Dude, Apple is primed for a historic beat this quarter. The CFO guided to $37B and $9.30eps. That’s compared to $26.7B and $6.43 eps. Apple hasn’t missed their guidance in like 10 years, and usually beats 10 to 20%. So, you can easily see Apple’s eps should be above last year’s by 50%+. You don’t have to worry about only 35%.
  
  If you think traders should short Apple, they are going to be in a world of hurt next week.
kingmel

Thursday, January 19, 2012 - 6:10 pm · Reply

So, Google’s net revenue was $8.13 billion in the fourth quarter (not sure if their fiscal year is aligned with the calendar year, but it really doesn’t matter for my rant).

A few months ago, Apple posted quarterly revenue of $28.27 billion and quarterly net *profit* of $6.62 billion in their fourth quarter of 2011. And Apple’s holiday quarter is likely to far exceed those lofty numbers. Yet, AAPL sits at $428 (after gradually rising in recent weeks) while Google sits at $575 after falling 10%.

Do investors really believe that Google has that much upside in the years to come. Do they fully appreciate the risks associated with Google’s business strategy? I don’t get it.
- KenC
  
  Thursday, January 19, 2012 - 7:30 pm · Reply
  
  A company’s stock price is not a reflection of their market cap. Just because Google’s stock price is higher than Apple’s means nothing.
breeze

Thursday, January 19, 2012 - 6:11 pm · Reply

To paraphrase the beloved great Stev Jobs:

Fuck that Do no evil shit .

Here’s how Goog ended the day:

Google Inc. (GOOG) -NasdaqGS
639.57 6.66(1.05%) 4:00PM EST|After Hours: 582.93 56.64 (8.86%) 6:08PM EST – Nasdaq Real Time Price

How’s that for karma?
breeze

Thursday, January 19, 2012 - 6:13 pm · Reply

To paraphrase the beloved great Steve Jobs:

Fuck that Do no evil shit .

Here’s how Goog ended the day:

Google Inc. (GOOG) -NasdaqGS
639.57 6.66(1.05%) 4:00PM EST|After Hours: 582.93 56.64 (8.86%) 6:08PM EST – Nasdaq Real Time Price

How’s that for karma?
- Thomas65807
  
  Thursday, January 19, 2012 - 10:43 pm · Reply
  
  You can say that again!
KRONOS

Thursday, January 19, 2012 - 8:09 pm · Reply

Couldn’t have happened to a nicer company… or to all the call options buyers