Stock Talk: Why Google's Q3 earnings aren't nearly as bad as you might think

On Thursday, Google faced the embarrassing situation of seeing its Q3 financial results released prematurely. The stock tanked on the results, and Google asked to have trading stopped temporarily. I’ve already seen one story suggesting that the early release “wiped out $20 billion in valuation.”

But let’s get real. The loss has nothing to do with the accidental release. It was someone else’s mistake, not Google's, and anyone on Wall Street knows that the real reason Google was trading down was the quarterly miss.

More: Google's complete Q3 2012 earnings

Stocks -- or, more accurately, investors -- always react to quarterly results. Analysts keep detailed models of their expectations, and the average of these models is known as the “consensus estimate.”  If you miss consensus, as Google dod, you get punished. It really means nothing in the long term, but it gives financial media types something to get excited about for a few days.

So, Google did something the pros call “shitting the bed.” The most important headline number is earnings per share, where Google came in at $9.03 (adjusted) versus the consensus estimate of $10.65. Big miss.

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Source: http://feedproxy.google.com/~r/androidcentral/~3/UR7QmqcFwac/story01.htm

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