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Shares of Google (GOOG) dipped as much as 10% intraday, as the Internet bellwether prematurely released earnings before the closing bell.

Shares Halted

The early release appears to be a fat-finger error. The press release seems to be a draft, with the phrase "pending Larry quote" in the document. Google states that its publisher released the earnings report without final authorization:

We have ceased trading on Nasdaq while we work to finalize the document. Once it's finalized we will release our earnings, resume trading on Nasdaq and hold our earnings call as normal at 1:30 p.m. PT.

Release Details

Here's a quick snapshot of the key quarterly metrics from the SEC Form 8-K:

  • Quarterly revenue is $11.33 billion vs. analyst expectations of $11.83 billion
  • Q3 2012 EPS is $9.03 compared with Q3 2011 of EPS $9.72
  • Q3 2012 total paid clicks increased 33% year over year
  • Q3 2012 average cost-per-click (CPC) is down 15%

Despite the Motorola acquisition and the Android platform, the bulk of Google's franchise value is derived from search. We expect the Q&A from the upcoming conference call to address the root cause of the decline in CPC. As Google is well aware from the experience of competitor Facebook (FB), investors are concerned about opportunities in mobile ads. We expect this to be addressed in the call.

Our Take: Smells Like a Buying Opportunity

Our initial read is that sales forecasts are noisy, and this rapid stock drop has the footprint of the high-frequency algorithms. Take a step back and consider the fact that quarterly misses happen. No business is perfectly predictable. Average CPC may be lower due to the weak macroeconomy rather than difficulty in the mobile space. At a P/E of 21, Google is not priced for perfection. In fact, this may turn out to be an attractive entry point in the upcoming trading sessions.

We will update our read after the conference call.

Source: Google Traffic Up, Costs Per Click Down 15% Year Over Year