Posts Tagged ‘Google’

Google gags on Q3 snafu

October 18, 2012

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.”

© 2012 Johnson Strategic Communications Inc.

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Inside the Google IPO

May 4, 2010

Eric Schmidt, chairman and CEO of Google, tells a good story in the May 2010 issue of Harvard Business Review – taking us behind the curtain of the initial public offering for the cyber-giant that is everywhere in our lives.

Investor relations practitioners will enjoy this tale (“How I Did It: Google’s CEO on the Enduring Lessons of a Quirky IPO” – available free on the HBR site).

Schmidt dwells on the Google culture that was determined to be different. This IPO was different … from the decision to do a modified Dutch auction offering … to an unusual letter from the founders in the registration statement (“An Owner’s Manual” for Google’s Shareholders) … to the Playboy interview during the quiet period, which Google added to its S-1 to cure the selective disclosure issue … and – especially – those values Google holds dear (“Don’t be evil” and the like). See the registration statement here. You don’t have to buy it all to appreciate the story.

Somehow it worked out, despite a so-so market in Summer 2004. Schmidt recalls:

We flew overnight to New York to watch our shares start trading on the Nasdaq on Thursday, August 19. We showed up in the morning, bleary-eyed. That day the Wall Street Journal had run a front-page piece with the headline “How Miscalculation and Hubris Hobbled Celebrated Google IPO,” and CNBC commentators were talking us down all morning. I remember thinking as we headed down to the Nasdaq trading floor, We’re screwed.

Just before the trading started, there was a countdown on the floor: 5-4-3-2-1. We watched the first trade, but it wasn’t at $85 [the agreed pricing with the investment bankers]—it was at $100, an 18% increase over our IPO price. … The volume was huge.

All day long the stock price never went down. It closed at $100.30.

We were now public. Thrilled and exhausted, we flew home to California.

The investor communications effort back in ’04 was unconventional, and Wall Street naysayers said GOOG wasn’t going to make it out of the IPO starting blocks.

But Google raised $1.67 billion on that August day, selling a minority of its shares and establishing a market capitalization of $23 billion. Today, the market value is $161 billion. It’s been a pretty good ride for the Googlers, wouldn’t you say?

© 2010 Johnson Strategic Communications Inc.