It’s rare that the way in which an IT company's financial results are released trumps the numbers themselves, but that's what happened with Google's Q3 earnings report. The news that profits dropped 20% seems almost a side note to what is being described as a market snafu.

Google’s Snafu

If you haven’t heard already it goes something like this: Google was due to release its third-quarter earnings after the markets closed yesterday. Instead, the company responsible for the financial report -- RR Donnelley & Sons Co. -- released the report around midday, causing a massive sell-off of Google stock.

Google’s share price dropped so quickly that it in 20 minutes it lost US$ 20 billion of its market value with a 9% drop in midday trading. The Nasdaq was obliged to stop trading in Google shares for nearly three hours, but even after resumption, the price only inched up, closing 8% down.

Google CEO Larry Page later apologized to Wall Street after the market closed, describing the incident as a “scramble” and adding that the report was released because “our printer hit send on the release just a bit early.”

Mistakes happen, but at a company this size, this kind of mistake shouldn’t be happening (and your thoughts would have to go out to the unfortunate office drone who pressed the send button).

The Web is already buzzing with conspiracy theories, with some even suggesting that the release was deliberate, and an attempt to deflect attention from the poor performance from Google in the past quarter.

Google Q3 Profits

However unlikely this may be, it doesn't get away from the fact that Google’s Q3 profits fell by 20%. In fact, Page didn't really talk about that at all, instead pointing out that Google’s revenues increased by 45% over the quarter, hitting US$ 14 billion, and putting it on target to make revenues of US$ 60 billion over the next 12 months.

The important thing here is that Page insists that Google is in a strong enough position on the web to exploit its search capabilities and mobile advertising -- and to calm jittery investors.

As we have seen this week with both Microsoft and IBM, there is a global slump across all IT sectors -- and Google is not immune. While many see Page’s focus on revenues rather than profits as an attempt to avoid the issue, all the other major tech players are doing the same. And even now, it’s not a crime to try and pull the good out of generally abysmal figures.

Monetizing Mobile

If Microsoft is being hit by problems with the PC market, then so too is Google. Currently, there is a major shift from desktops to laptops and -- even more significantly -- to mobile devices like smartphones and tablets.

The issues around this have still to be worked out, not least of which is the sophistication of mobile ads. At present, they are still less developed and make less money than ads for desktops, which is one reason that the cost-per-click for Google in the past quarter has dropped by as much as 15%.

During the conference call, Page said that Google is activating over one million Android sets per day, with Google generating US$ 8 billion from this annually, up from US$ 2.5 billion last year.

Page was also optimistic about the coming months, and while admitting that it would be challenging, said that Google will be looking at developing its mobile advertising abilities even more:

As we transition from one screen to multiscreens, Google has enormous opportunities to innovate and drive ever higher monetization,” he said.

Google”s Q3

Google’s revenues hit US$ 14.1 billion for the quarter that ended September 30, which was up 45% on the quarter last year, even if profits were down. After expenses and payments to advertising partners, that revenue fell to US$ 11.3 billion, over US$ 300 million less than analysts had expected.

Overall, hit by heightened costs and weaker ad prices, net income was also down to US$ 2.18 billion from US$ 2.73 billion. Costs included the operation of its data centers, content acquisition and the cost of processing credit cards, which rose to US$ 3.78 billion, or 27% of revenue.

Ad revenue was also up despite everything, with income rising by 16% over the quarter. Paid clicks jumped by 33% on the year and 6% from the previous quarter.

The other item that investors were looking for was how Motorola was performing for Google. Google's acquisition of Motorola was one of the big deals of the year and closed in May, costing Google US$ 12.5 billion. It hasn't really done too well in this quarter, but it is unlikely that anyone was expecting very much from it.

Motorola showed an operating loss of US$ 527 million on revenues of US$ 2.6 billion, with not too many signs of product releases coming from that direction -- with the exception of three Droid Razr devices that received a lukewarm reception in September.

It hasn't been a great quarter for Google -- but it hasn't been a great quarter for anyone. IBM did poorly, Intel wasn't much better, Microsoft failed to meet expectations, and now Google. It's a sure bet that the IT industry is hoping for an upturn in the next quarter.