Google Inc. reported third-quarter profit and sales that missed analysts’ estimates, a sign that its tools are becoming less valuable to advertisers while costs associated with expansion into new businesses are chipping away at profitability.
Profit excluding some items was $9.03 a share, the Mountain View, California-based company said in a regulatory filing today. Excluding sales passed to partner sites, revenue was $11.3 billion. Analysts on average had estimated profit of $10.65 a share on sales of $11.8 billion. Before being halted, the stock tumbled after the results were released earlier than expected.
The average amount advertisers paid each time a user clicks on a promotion declined about 15 percent from a year earlier, and was 3 percent less than the prior period. The company also is ramping up spending on engineering, marketing and acquisitions to help it expand beyond search advertising. The company earlier this year spent $12.4 billion on Motorola Mobility Holdings, pushing it further into the hardware market and stepping up its rivalry with Apple Inc.
“The core business itself is slowing down,” said Colin Gillis, an analyst at BGC Partners LP.
Google shares tumbled as much as 11 percent to $676 after the report, which came during regular trading hours in New York. The stock was later halted. It had gained 17 percent this year through yesterday.
A press release in the SEC filing -- which was released before the company was planning to release results -- has a line at top of statement that says: “Pending Larry quote.”