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Did Google Just Release A Last-Minute Earnings Warning?

Tyler Durden's picture




 

While most look forward to tomorrow's earnings announcement from Google with hope that it is not a replica of the early-announced Q3 earnings fiasco from October which went the 2nd most widely held hedge fund stock plunging by some 7% in seconds, many have missed that late on Friday, Google issued a release on its Investor Relations website which however was not matched by an 8-K in EDGAR (recall the Reg FD hot water Netflix got in over a comparable PR flap) - a release that some have interpreted as an ad hoc warning that the company may in fact miss expectations once again.

From Google:

And now for a little accounting…

 

In anticipation of our upcoming earnings release and given our pending Motorola Home sale announced in December 2012, we wanted to remind everyone about the related accounting treatment of this deal, known as “discontinued operations.” In short, financial results from Motorola Home will be presented as a separate line item in our 2012 consolidated statements of income. While this is a standard accounting treatment (more details below), people who follow our company may not be fully aware of how it impacts our financial reporting. For example, as of this writing, a majority of Wall Street analysts who cover Google have not reflected the Home business as discontinued operations in their estimates.

 

At the risk of boring everyone silly, here are the nitty-gritty details:

 

In accordance with U.S. generally accepted accounting principles (GAAP), an entity is required to present the results of a business to be disposed as discontinued operations if the business is clearly distinguishable from the rest of the entity and the entity will not have any significant continuing involvement in the operations of the business after the disposal. Results from discontinued operations are required to be presented separately from the results of continuing operations, below net income from continuing operations.

 

As the sale of the Home business meets the above U.S. GAAP criterion, we are required to present the Home results as discontinued operations in our consolidated statements of income. That means our net income for this quarter as well as for Q212 and Q312 will be split between our ongoing operations and the Home business. Note that assets and liabilities of the Home business will not be separated out from our other reported financial and operating measures, such as our consolidated cash flow and balance sheet as the Home business is not material to those measures.

 

Posted by Brent Callinicos, VP, Treasurer and Chief Accountant

Just an accounting footnote clarification from the firm's Treasurer? Maybe. Maybe not. Here is how some others translated the rather odd notice, which once again, did not have an 8-K to go alongside the website-only release. From Reuters:

Google Inc issued a rare advisory to Wall Street on Friday that analyst estimates for its fourth quarter financial results are flawed.

 

The world's No.1 search engine, which reports its quarterly results on Tuesday, said most analysts have not adjusted their estimates to reflect the pending $2.35 billion sale of the Motorola Home business.

 

The discrepancy means the fourth-quarter net revenue that Google reports on Tuesday could appear to be less than the $12.34 billion average that analysts polled by Thomson Reuters I/B/E/S are expecting.

 

Raymond James analyst Aaron Kessler says his fourth-quarter net revenue estimate includes nearly $900 million from the Motorola Home business.

 

"They're saying that the headline number is going to be less than what most analysts have for Q4," said Kessler.

 

The advisory is a rare move for Google, which does not provide financial forecasts and typically has limited interactions with analysts. The company has in the past provided accounting advisories to analysts about the Motorola Mobility business, which Google acquired for $12.5 billion in May.

 

Analysts expect Google to report adjusted earnings of $10.56 per share for the fourth quarter.

 

"It's a little surprising that they're doing this the Friday before the report," said Kessler. "They should have put it out a week ago if they wanted analysts to change their numbers."

One week in, Q4 earnings season has been relatively tame, and thanks to the now traditional accounting gimmicks from the banks, has in fact beat top and bottom line expectations. Is Google about to be the first company that upsets this trend? And will the miss be blamed on analyst misunderstanding of expectations, and their inability to understand the difference between continuing and discontinued operations? In a world in which CAT expects its investors to believe that half of its Q4 earnings were just wiped out because "someone" did not do their due diligence on a Chinese bolt on acquisition, this is certainly a possibility.

And with trading closed today, the rush will be on tomorrow as investors and traders scramble to understand just what GOOG is set to report after the close, or, as the case was last time, unexpectedly sometime in the middle of trading day.

 

And the same from the perspective of Bing...

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Mon, 01/21/2013 - 11:22 | 3172667 GMadScientist
GMadScientist's picture

Holey Schmidt!

Mon, 01/21/2013 - 11:39 | 3172721 Arrowflinger
Arrowflinger's picture

No Schmidt, the Chrome lost its polish.

Mon, 01/21/2013 - 12:31 | 3172873 Jani
Jani's picture

You are correct Arrow, Google is slowly loosing it's polish.

Even as Internet neophytes use the personally much hated term "just Googe it" as if Google is "the " Internet, seasoned users are running away from Google in droves because of all the evil.

I made the switch a few months back, as have many friends and family to a less intrusive SE without all the bullshit.

Basically same search results without the tracking.

Try:

http://ixquick.com

or sister site:

http://startpage.com

One day, Google will go the way of AltaVista and AOL and all the others

(I hate to admit it, but I remember tha day I thought AOL was "the" Internet)

Mon, 01/21/2013 - 13:58 | 3173197 xtop23
xtop23's picture

Duckduckgo.com ftw

Mon, 01/21/2013 - 20:45 | 3174219 Enslavethechild...
EnslavethechildrenforBen's picture

Fake schools, fake cops, fake newspaper and radio, fake evening news, fake Google News, fake Google search, fake hollywood, fake elections, fake politicians and judges. What's real is the bastards have our fucking printing press and are buying drones to bomb our asses with our own fucking money.

Mon, 01/21/2013 - 14:56 | 3173375 zerozulu
zerozulu's picture

Google snitch, we ditch.

Mon, 01/21/2013 - 20:37 | 3174208 Non Passaran
Non Passaran's picture

Google won't gothe way of Altavista, but the ads and g+ annoyance (where they constantly try to turn you in to a fucking g+ user) are sure annoying as hell.
Fuck 'em.

Mon, 01/21/2013 - 12:42 | 3172917 Fox-Scully
Fox-Scully's picture

Being of Polish ancestry, I take umbrage to this comment!

Mon, 01/21/2013 - 18:58 | 3173995 Zero Govt
Zero Govt's picture

Holy MacMiddleton, Reggie looks sooooo fucked!!!

another worthless accountant who can't see passed his own nose (retainer) falls into the grave marked 'Man of Maths & Logic RIP'

unlike Reggie who reminds us 17 times when he's right and peddles absolute BS when he's wrong I shan't take a bubble bath in self congratulation and wallow in the depths of human rigthousness I showed another man of stupidity (logic) his grave in double-quick time

Nah Nah Nah Na Naaaaaaa  ;)

Mon, 01/21/2013 - 11:46 | 3172733 bank guy in Brussels
bank guy in Brussels's picture

Eric Emerson Schmidt, Chairman of Google Inc., the most insidious criminal company on the planet ... the CIA-seeded partner of US government terror

Schmidt and Google managing the internet suppression of dissidents, and internet hoaxing for US-Israeli interests while Goog blocks victims from replying

Another reason Google is looking negative are the European charges against them

Live Photo: Google Inc. Caught Censoring Search Results on US court corruption (for USA - CIA) -
Google Internet Censorship - Censure d'Internet par Google - Internet censuur door Google
http://www.flickr.com/photos/22325431@N05/6100668211/in/photostream

'Ex-Agent: CIA Seed Money Helped Launch Google', retired intelligence agent Robert David Steele interviewed by Paul Joseph Watson, and speaking of the CIA's Dr Rick Steinheiser and his connections with Google:
http://www.infowars.com/articles/bb/google_cia_seed_money_launched_googl...

Mon, 01/21/2013 - 12:02 | 3172780 TruthInSunshine
TruthInSunshine's picture

Google is...

 

"Al-C.I.A.-da data aggregator...."

 

 

I think I have a stuxnet virus.

Mon, 01/21/2013 - 12:32 | 3172876 walküre
walküre's picture

Eric Schmidt and daughter travelled to NK "privately" this month. Discussing "access" to the internet or rather lack thereof. Egyptians installed a 3G network which is good enough for SMS but no wireless data, no internet.

Mon, 01/21/2013 - 20:38 | 3174215 Non Passaran
Non Passaran's picture

Fascism at its finest.
Controlled access to information and ads.
What's not to like?

Mon, 01/21/2013 - 12:32 | 3172878 Ignatius
Ignatius's picture

I use StartPage which supposedly sends an IP-anonomous query to Google and reports back.

Just sayin', as I have no financial interest in this.

Mon, 01/21/2013 - 14:09 | 3173237 TruthInSunshine
TruthInSunshine's picture

I heard that Tim Osman founded StartPage, too, though (Tim is the real financier and innovator who started Google).

ooops, I hear drones incoming...I forgot that 'Tim Osman' is a Stellar Wind buzzword. My bad.

Mon, 01/21/2013 - 11:23 | 3172668 nmewn
nmewn's picture

Snow storms...tidal waves...I had a flat tire...my dog crapped on the carpet...honest to God, it wasn't my fault!!!

Mon, 01/21/2013 - 11:38 | 3172717 AlaricBalth
Mon, 01/21/2013 - 11:44 | 3172730 CPL
CPL's picture

It's the power price hike of 35%.  A datacenter becomes very expensive in an inflationary environment.  

When I started in IT as a baby engineer, I would go to datacenters to do earn my daily bread but in the late 80's and early 90's everyone was in trouble with energy prices.  Datacenters were shuttered nearly overnight.  Anyone could pick up AES 7X00 series dumb terminals that used slightly less power than an electric furnace at auction for half pennies on the dollar.

Net energy cost is always a factor in computing.  After all, if the power isn't on, nobody has a service.

 

Meanwhile, this means that people should start to consider migrating from google to somewhere else for their legitimate business.

Mon, 01/21/2013 - 11:57 | 3172760 ShankyS
ShankyS's picture

Belushi - It wasn't my fault. 

 

http://www.youtube.com/watch?v=9TuLBa-rgBk

Mon, 01/21/2013 - 11:25 | 3172671 daccord
daccord's picture

chicken little said the sky was falling 

Mon, 01/21/2013 - 18:46 | 3173960 Zero Govt
Zero Govt's picture

the sky's falling in on Reggie Middletons maths... he said they were a dead cert bankable high tek hedge fund, just before not calling their 1st earnings miss (pity his subscribers)

no worries, Reggie has missed a 2nd earnings drubbing (double-pity his subsribers), but it'll all come good just so long as motor-mouth Reggie expels enough hot air to keep this cancerous dinosaur, GOOfball, airbourne

works for Ben Bernanke doesn't it?!!

 

Mon, 01/21/2013 - 11:25 | 3172672 ziggy59
ziggy59's picture

Blame the Arctic blast and ice cream has no bones

Mon, 01/21/2013 - 11:26 | 3172681 Rustycakes
Rustycakes's picture

As goes Google, so goes the nation.

Mon, 01/21/2013 - 18:49 | 3173970 Zero Govt
Zero Govt's picture

...and Reggie Middleton ..glug glug glug ;)

Mon, 01/21/2013 - 11:27 | 3172686 max2205
max2205's picture

Acted strange on the friday close.   Just like aapl before the squeeze last week

Mon, 01/21/2013 - 11:28 | 3172688 Tim Knight from...
Tim Knight from Slope of Hope's picture

As much as I'd like this to mean a huge red day for GOOG and the NASDAQ, both the ES and NQ are bright green (again...........), so I'm guessing this is going to be a total non-event (at least until the earnings actually come out).

Mon, 01/21/2013 - 13:13 | 3173018 gjp
gjp's picture

Well last quarter GOOG, AAPL, and AMZN all missed and the Nasdaq is only higher since then.  Remember the only fundamentals that count are Fed-umentals.

Mon, 01/21/2013 - 11:30 | 3172695 blueRidgeBoy
blueRidgeBoy's picture

If Google is evil, and Google is God, does that mean God is evil? 

Mon, 01/21/2013 - 11:57 | 3172759 trollin4sukrz
trollin4sukrz's picture

Of course. God created evil, so by way of association God is evil.

 

 Isaiah 45:7

I form the light, and create darkness: I make peace, and create evil: I the LORD do all these things.

American Standard Version
I form the light, and create darkness; I make peace, and create evil. I am Jehovah, that doeth all these things.

Mon, 01/21/2013 - 12:54 | 3172962 nope-1004
nope-1004's picture

In the Caribbean they have a saying along those lines:  "De devil may brinnit, but God sennit."

 

Mon, 01/21/2013 - 13:29 | 3173090 NoLongerABagHolder
NoLongerABagHolder's picture

Just because the ASV rendered it evil doesn't mean they got the sense of the Hebrew word correct. The Hebrew word there in Isaiah is 'ra. In the context it means calamity, since first part of the sentence is better rendered prosperity, well -being, peace. When people don't know the rest of scripture or proper hermeneutics, they like to make the scripture say what they want to say.

Go back the Hebrew and Greek, in the context of all of scripture, to get a better idea for the rendering and meaning. God causes things to happen, I don't deny that. But God is not evil:

 Thou art not a God who takes pleasure in wickedness; no evil dwells with Thee (Psalm 5:4)

The word ra' is used throughout the Old Testament with several meanings. It is used many times to mean something morally evil or hurtful (Job 35:12, 1 Sam 30:22, etc.) but it is also used to mean an unpleasant experience (Gen 47:9 and Prov. 15:10). It is used to describe fierce beasts (Lev. 26:6), and even spoiled or inferior fruit (Jer 24:3). Certainly, the figs that Jeremiah was looking at were not evil in the sense of morally reprobate!

In Isaiah 45, the word evil is used in a contrast to the peace and well-being discussed before it. I quote John Haley:

Evil means natural, and not moral evil, or sin. Herderson says "affliction, adversity"; Calvin, "afflictions, wars, and other adverse occurrences."

Whichever interpretation may be adopted, none of the above texts, nor any others when properly explained, sanction the revolting proposition that God is the author of sin.

 

God, in Hebrew thought, is considered the final authority over everything. If wars or famine happen, then God has allowed that to occur, and therefore controls evil. He does not initiate any type of evil. When a man seeks to sin and commit adultery, that is his choice. He should not expect God to protect him, then from any disease or negative ramification of his choice. God's judgments and the loss of His protection are how he creates afflictions in the lives of men. Judgment is not morally wrong, though. Quite the opposite. Judgment is what we expect of a righteous God.

 

 

Mon, 01/21/2013 - 14:48 | 3173355 walküre
walküre's picture

So ... pretty much left to everyone's own interpretation. Much like the ongoing corruption and manipulation with truth and facts from Wall Street to Penn Ave. It's a Jewish world view and us dumb goym will never get it right.

The word ra' is used throughout the Old Testament with several meanings.

Mon, 01/21/2013 - 15:30 | 3173471 NoLongerABagHolder
NoLongerABagHolder's picture

no, not at all left up to everyone's interpretation. Hebrew is a hard language that doesn't translate easily in every instance to English. That is a translation issue, not an interpretation issue. If you go back to the original languages, you begin to understand the true sense of the word, since that is the language used when it was written. Also -basic and proper interpretive skill is needed, such as understanding a word in context. For example, I can say to you that the sun rises...... in context of a morning sun, you would understand the meaning of that though scientifically you get the fact that the sun remains motionless, and the earth rotates. In the context of a sunrise though, you get the meaning of the word. That statement doesn't give you freedom to make your own conclusions though about the truth and determine..... "well, he said the sun rises, therefore I conclue that the sun moves."

Your interpretation would be wrong as you take statements out of context. Context is key for interpreting not only the bible....... but any written document.

Mon, 01/21/2013 - 15:02 | 3173388 TheGardener
TheGardener's picture

I have given up on reading original script, Aramaic is one
dead language too many to learn, after Hebrew.

Polytheism with competing gods, neither good or bad
to start with , much better visualizes natures whims and human affairs .

Mon, 01/21/2013 - 11:34 | 3172704 J04NNY8
J04NNY8's picture

This could be a whole variety of things.  1st, thanks to tyler and ZH for pointing this out.  Who knew.  Or didn't know.  Or whatever.

That Reuters is clucking on about what is as the article points out a "known known" for anyone who reads 10-Ks somewhat closely as if there's skullduggery here needs to be noted.  A good chance there's a (not quite) invisible hand "moving" them to do so.  For those friend or foe to GooG is uncertain.

That GooG chose to point it out to me seems to be good corporate behavior.  Some who did not know might have been misled when quarterly/annual updates are published, without this point of reference that yes, overall earnings are decreased when operations are shut down.

OTOH others who did not know may now be trying to scrape a few turnips together to make the most of what will almost certainly be a significant, if short, stock purchasing opportunity.

Mon, 01/21/2013 - 11:35 | 3172706 Dr. Engali
Dr. Engali's picture

Bush's fault.

Mon, 01/21/2013 - 12:34 | 3172884 Acidtest Dummy
Acidtest Dummy's picture

His prize is waiting at the Hague.

Mon, 01/21/2013 - 11:35 | 3172708 LeisureSmith
LeisureSmith's picture

Motorola Home...What a terrible name. I think a rebranding is called for. Trailerpark Technologies for the win.

Mon, 01/21/2013 - 11:37 | 3172711 Raynja
Raynja's picture

government is evil

government is your friend

government is god

government is better than individual rights

Mon, 01/21/2013 - 11:37 | 3172714 schatzi
schatzi's picture

My first option was: google israel. Why not google islam? Clear case of bias.

Mon, 01/21/2013 - 11:55 | 3172725 spanish inquisition
spanish inquisition's picture

"We will be writing off some minor amount somewhere between Caterpiller and HP writeoffs."

Mon, 01/21/2013 - 11:51 | 3172743 PUD
PUD's picture

Is this what "investors" do? Bet on every tweak and twist and analyst expectation for every 12 week period?  Yeah, I guess it is. And people will wonder why the casino full of drunken sailors burned to the ground

Mon, 01/21/2013 - 11:53 | 3172747 Oleander
Oleander's picture

According to Google Zero Hedge is .......Isreal!

Mon, 01/21/2013 - 11:55 | 3172750 Mrmojorisin515
Mrmojorisin515's picture

In Honor of today i quote a true genius

 

"When a President goes traveling he never goes alone, but always with a huge staff of secretaries, Secret Service agents, doctors, nurses, and newspaper reporters... The cost, to be sure, is borne by the taxpayers, but the President has to put up with the company... When the train arrives anywhere at all the town bores and scoundrels gather to greet the Chief Magistrate, and that night he has to eat a bad dinner, and to listen to three hours of bad speeches.
...
All day long the right hon. lord of us all sits listening solemnly to bores and quacks. Anon a secretary rushes in with the news that some eminent movie actor or football coach has died, and the President must seize a pen and write a telegram of condolence to the widow... Anon there comes a day of public ceremonial, and a chance to make a speech. Alas, it is discovered, at the last minute, to be made up mainly of gentlemen under indictment, or at the tomb of some statesman who escaped impeachment by a hair. Twenty million voters with IQ's below 60 have their ears glued to the radio; it takes four days' hard work to concoct a speech without a sensible word in it. Next day a dam must be opened somewhere. Four Senators get drunk and try to neck a lady politician built like an overloaded tramp steamer. The Presidential automobile runs over a dog. It rains."

Mon, 01/21/2013 - 12:06 | 3172782 alien-IQ
alien-IQ's picture

Here's what I know for sure:

If Google misses their earnings by a country mile (again)...Reggie Middletons computer will be experiencing a technical problem that will not allow him to comment on this matter in any detail.

Mon, 01/21/2013 - 12:28 | 3172861 Shizzmoney
Shizzmoney's picture

From the technical side, Reggie has good analysis on why Google/Android has a better chance of outperforming Apple.  He does miss one key point:

BOTH companies bore from the same bubble.  And they too will pop, along wit hthe USD and everything else.

Mon, 01/21/2013 - 12:41 | 3172913 Rentier
Rentier's picture

Not hard to beat Bing.

Mon, 01/21/2013 - 12:54 | 3172966 100pcDredge
Mon, 01/21/2013 - 12:56 | 3172970 bugs_
bugs_'s picture

May you google in interesting times.

Mon, 01/21/2013 - 13:14 | 3173013 Banksters
Banksters's picture

Google now filters porn.   If you want to see it you have to query hard core.   Don't say tits, say tit fucking.

Do NOT follow this link or you will be banned from the site!