Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Google Earnings Release: Google Issues Advisory to Wall Street

Google Earnings Release: On Friday, Google Inc. (NASDAQ:GOOG) did something that you don’t see very often. The search engine powerhouse issued an advisory to Wall Street, getting word out that analyst estimates for fourth quarter financial results were flawed.

Before we take a closer look at what Google had to say about this on its investors relations page, let’s see what a recent article by Reuters had to say:

“The world’s No.1 search engine, which reports its quarterly results on Tuesday, said most analysts have not adjusted their estimates to reflect the pending $2.35 billion sale of the Motorola Home business.”

“The business must be presented separately from the results of Google’s continuing operations under U.S. accounting rules, Google Treasurer Brent Callinicos wrote in a post on Google’s investor relations Web page on Friday.”

Google Inc (GOOG)Why is this so rare, you may be wondering? According to the same article by Reuters, Google Inc (NASDAQ:GOOG) is not in the habit of providing financial forecasts. Along with this, they have distanced the company from analysts with limited interaction over the years.

For an inside look at this situation, Raymond James analyst Aaron Kessler was interviewed by Reuters for the article:

“Raymond James analyst Aaron Kessler says his fourth-quarter net revenue estimate includes nearly $900 million from the Motorola Home business.”

Kessler was quoted as saying, “They’re saying that the headline number is going to be less than what most analysts have for Q4.”

Now that you have an idea of what is going on and how outsiders perceive this situation, let’s dive into the finer details of the official release from Google Inc (NASDAQ:GOOG) VP, Treasurer and Chief Accountant Brent Callinicos:

“In anticipation of our upcoming earnings release and given our pending Motorola Home sale announced in December 2012, we wanted to remind everyone about the related accounting treatment of this deal, known as “discontinued operations.” In short, financial results from Motorola Home will be presented as a separate line item in our 2012 consolidated statements of income. 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.”

“In accordance with U.S. generally accepted accounting principles (GAAP), an entity is required to present the results of a business to be disposed as discontinued operations if the business is clearly distinguishable from the rest of the entity and the entity will not have any significant continuing involvement in the operations of the business after the disposal. Results from discontinued operations are required to be presented separately from the results of continuing operations, below net income from continuing operations.”

“As the sale of the Home business meets the above U.S. GAAP criterion, we are required to present the Home results as discontinued operations in our consolidated statements of income. That means our net income for this quarter as well as for Q212 and Q312 will be split between our ongoing operations and the Home business. Note that assets and liabilities of the Home business will not be separated out from our other reported financial and operating measures, such as our consolidated cash flow and balance sheet as the Home business is not material to those measures.”

What are your thoughts on this rare advisory issued by Google?

Check back here for more updates on Google Earnings Release.

DISCLOSURE: I have no positions in any stock mentioned.

Here are a few additional news stories for your enjoyment:

Information on Google Inc Chrome for Android Beta Release

Edinburgh Partners Loves Google Stock

Did Google Block Windows Phone Users from the Maps App?

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.