Google to Wall Street: Your Q4 estimates are wrong

The search giant said today that its fourth quarter earnings may not be quite as Wall Street expects, because they "may not be fully aware" that its Motorola Home business is being sold off.
Written by Zack Whittaker, Contributor

You know it's Friday when a major technology giant has to remind, of all people, Wall Street analysts to accurately reflect their estimates for its upcoming fourth quarter results.


Google said today in a note on its investor pages that it wanted to "remind everyone" about the pending deal of its Motorola Home business to network and telecommunications equipment maker Arris for $2.35 billion.

You know, just in case people 'forgot'.

In the note, Google is gently nudging Wall Street analysts that their expectations for the search giant's fourth quarter earnings are too high, and failing to consider the sale of the Motorola Home business, which will have an effect on the company's earnings.

Google will release its fourth quarter earnings on January 22, after the closing bell.

Because Google is selling off its Motorola Home business -- Motorola was acquired and clear by global authorities for $12.5 billion, which has since been bumped to about $13 billion thanks to restructuring costs -- the search giant won't include the numbers from that unit in its report, thus altering the estimates.

"In short, financial results from Motorola Home will be presented as a separate line item in our 2012 consolidated statements of income," the note from Google said. 

The search giant added:

While this is a standard accounting treatment (more details below), people who follow our company may not be fully aware of how it impacts our financial reporting. For example, as of this writing, a majority of Wall Street analysts who cover Google have not reflected the Home business as discontinued operations in their estimates.

Why is Google bothered? Simply put: if Wall Street analysts inflate what they believe Google may earn, the company could suffer a share price drop if analysts then believe that the firm underperformed -- even though it may not have done. 

J.P. Morgan analysts estimate that the firm's fourth quarter revenue will be about $11.4 billion -- down $1 billion on the old estimates -- with a year-on-year growth of about 40 percent. Earnings per share stand at $10.19, down from previous estimates of $10.58 per share.

A Google spokesperson declined to provide comment beyond the Investor Relations blog post.

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