THE premature release of third-quarter earnings wiped as much as $22billion off Google’s share price before trading was halted yesterday, bringing the search-engine giant’s market capitalisation below Microsoft’s.
The human error which led to a press release bearing the words “awaiting quote from Larry” being published early has cost the company 10% of its share value.
This latest blow to the tech industry, thought to be caused by falling advertising revenues and costs associated with the takeover of Motorola Mobility, is not the first of its kind and has left some to question whether the sector’s honeymoon is over.
Cisco
In 2010, networking company Cisco lost 16% of its value, representing billions of dollars, when CEO John Chambers announced weak quarterly forecasts, citing a huge decrease in public sector orders which the firm were unprepared for.
In 2011 the company shed 11,500 staff as part of $1billion of cost saving and this week Frank Calderoni told Fortune: “We were talking about larger growth opportunity in the 12% to 17% range back several years ago.
“With the refocus on the five foundational priorities we took that rate and said 5% to 7% revenue growth.”
Apple
In July, despite its growth remaining meteoric, Apple failed to meet the third quarter expectations of analysts and saw shares fall nearly 6% in after-hours trading
Although record sales continued and the company beat its own performance prediction, it did so by only 3%, having done so by an average of 19% every previous quarter for the past three years.
Last month, mapping issues with the company’s new iPhone 5 caused an online storm and there are now concerns over the pricing of the expected iPad mini which, if it enters the market at the lower end of rumoured prices, will undercut the current iPod touch range.
Since Facebook made its initial public offering in May its share price has fallen, reaching half its initial $38 value in August.
The social media company has struggled with falling advertising revenue and a poor financial performance by Zynga, the firm whose online games account for 15% of Facebook’s revenue, despite increases in user numbers.
Costs have risen almost four-fold in the past year with staff share schemes taking the firm from $295m profit to $157m loss for the quarter. Losses of $157m in the three months to the end of June stand in stark contrast to profits of $240m in the same period last year.
Brian Hamilton, chief executive of Sageworks, voiced concern that the firm may still be overvalued.
HTC
Increasing competition is also costing some players in the tech industry dearly.
Last week, Taiwanese smartphone manufacturer HTC reported a 79% drop in its profits as it lost market share to Samsung and Apple.
The brand has failed to keep up with rivals’ more frequent product releases and is now attempting to win back ground with the release of two Windows Phone 8 handsets.
Analyst Dennis Chan said: “The new models we saw in the past few weeks are not going to change the game. It will be able to keep its market share, but we won’t see much pick-up.”
IBM and Intel
Earlier this week, long-established tech titans IBM and Intel reported poor sales and falling revenues.
In addition to falling revenues, IBM blamed fluctuations in currency exchange rates and the dire state of the world economy.
Research by the International Data Corporation shows the PC market has shrunk 8% on the same period last year although it is likely to recover in the fourth quarter of this year with the release of Microsoft’s Windows 8 OS.