In the “Things Could Be Worse Department,” an investor relations nightmare struck Google Inc. today: Not only did third-quarter 2012 earnings decline and miss expectations, an unfinished draft of GOOG’s Q3 release was filed prematurely on the SEC’s EDGAR website, triggering a big sell-off before trading was halted.
“I think this is probably the worst technical screw-up I’ve seen in an earnings release in 20 years. I can’t think of anything as bad. I mean, clearly this was a premature release – it was put up on EDGAR prematurely. It even has boilerpate text in it that says, ‘PENDING LARRY QUOTE,’ “ said Bloomberg contributor Paul Kedrosky, a Kauffman Foundation fellow and blogger at Infectious Greed. ”The result, however, combined with how poor the numbers actually are, is pretty dire.”
Oh, yes, pretty dire. GOOG closed down 8% on nearly five times average volume, a haircut of about $20 billion for shareholders. No telling whether the stock price would have reacted as violently if bad earnings had been released in a more orderly way – say, after the market closed.
So Google is the lead news story on all the financial sites – with headlines like “Google results, filed by mistake, miss; shares dive” (Reuters), and “Live: the Google Earnings Disaster” (live blogging on WSJ.com). And, of course, the tribulations are even trending No. 1 on Google Finance.
The erroneous press release from EDGAR may become a collector’s item, something to post over your desk as a warning:
It will take time to sort out what all went wrong. Google blamed the early release on R.R. Donnelley, the financial printer that does a lot digital work for IR departments. No doubt there will be further statements and explanations.
For now, what is certain is that “Google – October 18, 2012″ will become a case study for investor relations officers in the future. A case of what not to do.
And each of us working on Q3 earnings for other companies should remember, “There but for the grace of God go I.”
Tags: Disclosure, Earnings, Google, Investor relations, Stock market
October 22, 2012 at 9:44 am
And yet one cannot help but observe: If the news had been published properly instead of early, GOOG likely would have been down MORE, because news on weak results would have coincided with Friday options-expirations trading and a rapidly rising dollar Oct 19. In a sense, GOOG was saved by the snafu.
October 23, 2012 at 3:58 pm
Bad stuff happens. The real test of company integrity and communications effectiveness will be whether they reacted properly. For example, was putting the hoarse CEO in front of microphones the right thing to do? Maybe, maybe not. Maybe not tainted Tylenol, but definitely a crisis communications case study for the ages.