(GOOG) was scheduled to release earnings after the market close. Inadvertently, earnings were released at 12:39 PM by its agent RR Donnelley (RRD). Google stock fell about 9% before it was halted. Both revenues and earnings were below consensus. To make matters worse, whisper numbers were higher than consensus.
In my analysis whisper numbers crept higher, not because of fundamentals but because investors who move money from Apple (AAPL) into Google were justifying their move and analysts had to justify their recent upgrades.
Most of the hoopla is about the early release, how some investors have been hurt by the early release and potential lawsuits. In the hoopla, the big red flag that shows Google’s core search business weakening is being lost.
Average cost per click (CPC) fell 3% from the second quarter and 15% from a year ago. Now CPC has fallen four quarters in a row.
As I have written before, Google’s core search business is facing twin challenges. First, more and more searches are taking place on mobile, and mobile is fetching less revenues compared to the desk top. It is typical for advertisers to pay less for advertisements on mobile.
Second, a huge secular shift is underway. More and more, Google is being bypassed. A consumer may go directly to Amazon (AMZN) to search for a product, a job seeker may go directly to Linkeden (LNKD), a Facebook (FB) user may simply find an advertisement on her own page, and Apple iPhone users may simply find a restaurant by using Siri that draws information from Yelp (YELP)…Read more at Forbes