It’s every IRO’s worst nightmare. A draft of Google’s Q3 earnings release appeared on the SEC’s website at 12.30 EDT today, more than three and half hours earlier than it was meant to go out after the market close.
With Google’s profit falling 20 percent from last year’s Q3, worse than analysts’ estimates, the stock price tumbled 9 percent before trading was halted on NASDAQ.
Aside from the disappointing numbers, the highlight of the premature release was ‘PENDING LARRY QUOTE,’ where a canned quote from CEO Larry Page was waiting to be dropped in.
Google blamed the blunder on its financial printer, RR Donnelley. In a statement shared by the Wall Street Journal, Google said, ‘Earlier this morning RR Donnelley, the financial printer, informed us that they had filed our draft 8K earnings statement without authorization. We have ceased trading on NASDAQ while we work to finalize the document. Once it’s finalized we will release our earnings, resume trading on NASDAQ and hold our earnings call as normal at 1:30 PM PT.’
RR Donnelley issued its own statement – and showed it’s not quite ready to admit responsibility: ‘We are fully engaged in an investigation to determine how this event took place and are pursuing our first obligation – which is to serve our valued customer.’
Whatever RR Donnelley finds out or which junior staffer it fires, Google may have to shoulder some blame. In April 2010 it became the first company to stop distributing earnings releases over a newswire, instead just posting them on its website. That may have contributed to today’s mistake.
‘When putting out earnings, having a traditional newswire on your side, especially one with a baked-in filing division, gives you added safeguards,’ says Rachel Meranus, a spokesperson for PR Newswire, which acquired Vintage Filings in 2007. She adds that having vetting processes for both EDGAR filings and press releases under the same roof gives an extra level of protection.
RR Donnelley bought Bowne, its next biggest competitor, in 2010, giving the combined firm market share nearing 50 percent. Vintage Filings and Merrill Corporation are about even while another sizeable chunk of EDGAR filings come through small service providers and law firms or directly from issuers.
‘There has been a lot of industry consolidation over the years, and certainly RR Donnelley buying Bowne furthered that,’ says Liam Power, senior vice president of compliance services at Vintage Filings. ‘After merging their operations and systems over the last year, there’s definitely less choice than there used to be.’
Earnings leaks are not unheard of, even among companies of Google’s bulk. In January 2011 Microsoft’s release trickled out 15 minutes early when a data scraping company found it on a hidden page of Microsoft’s website.
In 2010 Bloomberg guessed the URLs for NetApp’s and Disney’s releases and revealed them earlier than the companies had planned. However, newswire insiders are hard-pressed to remember a gaffe as serious or as early as Google’s.
