For the second time in two weeks, bad news was inadvertently released ahead of schedule. Although Dow Chemical had planned to announce 2,400 employee layoffs and 20 plant closings on Thursday morning with its quarterly earnings statement, the news went out as a draft Tuesday night.
On Dow Chemical's earnings conference call, Doug May, VP of investor relations, explained the mishap in his introduction:
"Good morning, everyone, and welcome. Thank you for joining us on such short notice and being flexible with your schedules. As you know, we issued our earnings press release yesterday evening, October 23. This was earlier than usual due to an inadvertent and premature release of our restructuring announcement. Both the restructuring release and the earnings release went out on Business Wire and were posted on the Internet on dow.com."
In this case, the market reacted favorably to the restructuring. However, for Google, in a similar situation last week, the result wasn't nearly as positive.
Google's intent was to release its disappointing third-quarter results after the closing bell, but the draft statement slipped out on at 12:30 p.m. with the text "PENDING LARRY QUOTE." CEO Larry Page briefly said on the earnings call, "I'm sorry for the scramble earlier today."
Google blamed its finanial printer, RR Donnelly:
"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."
Google shares lost about 9% before trading was halted.
- Why is it important for companies to coordinate disappointing market news, such as layoffs and quarterly earnings?
- What controls should a company have in place to avoid this type of situation?