Google Quarterly Earnings Miss Hands 99% Losses to Bullish Options Traders
Kuang Linhua/ChinaFotoPress/ZUMA Press
Google reported fourth-quarter sales, excluding revenue passed on to partner sites, of $8.13 billion, falling short of the $8.41 billion average estimate of analysts surveyed by Bloomberg.
Google reported fourth-quarter sales, excluding revenue passed on to partner sites, of $8.13 billion, falling short of the $8.41 billion average estimate of analysts surveyed by Bloomberg. Photographer: Kuang Linhua/ChinaFotoPress/ZUMA Press
Jan. 20 (Bloomberg) -- Jeffrey Davis, chief investment officer at Lee Munder Capital Group, talks about wireless market competition between Microsoft Corp. and Google Inc. Davis, speaking with Scarlet Fu on Bloomberg Television's "InsideTrack," also discusses reaction to Google's fourth-quarter earnings. (Source: Bloomberg)
Jan. 20 (Bloomberg) -- Saverio Romeo, senior analyst at Frost & Sullivan, discusses Google Inc.'s fourth-quarter results reported yesterday. The owner of the world's most popular Web search engine said revenue rose to $8.13 billion, missing analysts' estimates, while profit before certain costs was $9.50 a share, missing the $10.50 average estimate. Romeo, speaking with Linzie Janis on Bloomberg Television's "Countdown," also talks about the outlook for Microsoft Corp. and International Business Machines Corp. (Source: Bloomberg)
Jan. 19 (Bloomberg) -- Aaron Kessler, an analyst at Raymond James & Associates, talks about Google Inc.'s fourth-quarter earnings. The owner of the world's most popular Internet search engine reported revenue and profit that missed analysts' estimates. Kessler speaks with Emily Chang on Bloomberg Television's "Bloomberg West." Bloomberg's Jon Erlichman, Julie Hyman and Cory Johnson also speak. (Source: Bloomberg)
Jan. 20 (Bloomberg) -- Kenneth Schapiro, president of Condor Capital Management, talks about Google Inc. and International Business Machines Corp.'s financial results and business outlook. Schapiro speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Google Inc. (GOOG) options traders who made bullish bets before the company’s quarterly report yesterday suffered the U.S. derivatives market’s biggest losses today after the search-engine operator missed analysts’ projections.
Google calls posted 10 of the 12 biggest declines among all contracts traded on U.S. exchanges as of 4 p.m. New York time, with each tumbling more than 99 percent, according to data compiled by Bloomberg. Shares of the Mountain View, California- based company tumbled 8.4 percent, the most since December 2008. January $595 calls, which expire today, retreated 99.98 percent for the biggest drop.
“Google is a one-day play because it’s expiration the next day, which is why it’s so hard to play on earnings,” said Andrew Keene, an independent trader at the Chicago Board Options Exchange. “There’s no time for a trade to work out,” he said. “It’s either worth something or it’s not.”
Options traders had boosted Google bullish bets at the fastest pace in almost 10 months on speculation that the company would report record earnings yesterday. That optimism backfired when Google missed analysts’ sales and profit estimates, dragged down by the European crisis and a push into mobile technology, which yields lower ad revenue.
Google reported fourth-quarter sales, excluding revenue passed on to partner sites, of $8.13 billion, falling short of the $8.41 billion average estimate of analysts surveyed by Bloomberg. Profit before certain costs was $9.50 a share, missing the $10.50 analyst forecast. Google had beaten earnings- per-share predictions in 11 of its prior 13 quarters.
Put Buying
Investors who bought Google puts yesterday to protect against a decline in the shares made money today. January $610 puts rallied 407 percent to $24.40 from $4.81 yesterday for the largest gain among all Google options. January $605 puts had the second-biggest gain, rising 365 percent to $19.47.
Google call-option volume was 150,556 contracts, less than trading in bearish bets, or puts, which was 169,301. Trading volume in Google call contracts rose to a two-month high yesterday as almost 130,000 contracts changed hands. Call options give the right to buy a security for a certain amount, called the strike price, by a given date. Puts convey the right to sell.
To contact the reporters on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net; Jeff Kearns in New York at jkearns3@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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