Google Tells Investors To Disregard Leak
Google Inc. on Tuesday advised investors to disregard an internal financial forecast mistakenly posted on its Web site -- a mix up that included a reference to management's concerns about the online search engine leader's profits narrowing amid tougher competition.
The material, including a projection that Google's revenue will rise by about 55 percent this year to $9.5 billion, surfaced on the Internet briefly last week when the company welcomed stock market analysts for a management presentation at its Mountain View, Calif. headquarters, according to a Securities and Exchange Commission filing.
Besides forecasting its revenue, Google indicated its robust profit margins might weaken this year as more its rivals try to lure away some of its advertising partners. The inadvertently leaked material didn't include any specific earnings forecasts.
In its SEC filing, Google described the information, which has since been removed from the Web site, as notes that were prepared for a product presentation last fall.
"These notes were not created for financial planning purposes, and should not be regarded as financial guidance," Google said. The company reiterated its long-standing policy against sharing its management's profit projections.
Even if the material didn't reflect Google's official predictions, the leaked information could renew investor concerns about the company's ability to live up to the lofty earnings expectations that have helped its stock price more than quadruple since an August 2004 initial public offering at $85 per share.
The stock market had already closed by the time of Google's SEC filing. The company's shares declined $3.65 to finish at $364.45 on the Nasdaq Stock Market, then dropped by another $8.33, or 2.3 percent, in after-hours trading.
Investors began to fret about Google's growth prospects in January after the company's disclosed its fourth-quarter earnings had fallen far below analyst estimates. The concerns were amplified last week when the company's chief financial officer told an investor conference that Google will be hard-pressed to improve upon the advertising formula that has been driving its rapid revenue growth.
Google's annual revenue has soared from $440 million in 2002 to $6.1 billion last year.
If it can generate $9.5 billion in revenue this year, Google will outstrip the pace envisioned by some of its most bullish supporters. For instance, Piper Jaffray analyst Safa Rashtchy, who believes Google's shares will reach $600 this year, expects the company to earn $2.4 billion on revenue of $9.3 billion this year.