Google blunder underlines danger of 'the unexpected' in financial announcements

The internet giant has seen about £12bn wiped from its value after an accidental email to the US stock market authorities revealed the company's latest quarterly results were below Wall Street's expectations.

The prematurely released financial release began with the words ‘PENDING LARRY QUOTE’, referring to the company's chief executive Larry Page.

Newgate Communications executive chairman Jonathan Clare commented on the blunder: ‘Markets don’t like surprises, and that’s why we are seeing its share price fall. It’s not about the information that’s in there as much as about showing the financial community that their assumptions about a company and its strategy are right and all on track. That’s the purpose of a results announcement.

‘When something comes up that is unexpected, lacking the CEO’s statement, you get a huge natural reaction on the part of the market – I don’t need this, I’m getting out.’

Clare added that the incident ‘underlines why financial announcements are so important to get right’.

Google’s response in the UK is being led by former Labour media handler Tom Price. Price informed PRWeek that Google issued a statement yesterday, which read: ‘Earlier this morning RR Donnelley, the financial printer, informed us that they had filed our draft 8K earnings statement without authorization.'

Price, who was formerly deputy director of press for the Labour Party and an adviser to then-shadow work and pensions secretary Douglas Alexander, joined Google in June as head of UK and Ireland comms.

Price is overseen by director of external relations Peter Barron, the former Newsnight editor.

Page followed the incident by holding a conference call with financial analysts, in which he said the quarter had been a strong one and that Google has big opportunities for growth, especially in mobile advertising.

Another financial comms agency boss, who declined to be named, said: ‘Our view is that errors like this have happened to many companies over the years and there is always a risk of human error or leak when sharing confidential information among partners.  

‘I think the swift and human comment by the CEO was a good attempt to neutralise the damage but that the damage is easy to monitor in the hit the share price has taken. Accidents happen, so companies need to ensure they are ready: have a plan in place to take swift decisions on corrective action and rehearse the plan regularly.’

This article was first published on prweek.com