Google Inc. blamed financial printing company R.R. Donnelley & Sons Co. for the premature release of results that showed a profit shortfall, caused shares to plunge and made Chief Executive Officer Larry Page the brunt of jokes shared widely on Twitter Inc.
The company’s third-quarter results were filed with regulators and made available to news wires with a placeholder for a quote from Page at about 12:30 p.m. in New York. R.R. Donnelley filed a draft of the document without authorization, Google later said on its blog.
The timing raised concerns about the company’s ability to release sensitive financial data in a fair manner, said David Larcker, a corporate-governance professor at the Stanford Graduate School of Business. The 9 percent drop in shares of Google, owner of the largest Web-search engine, wiped more than $22 billion from its market capitalization in minutes.
“It is highly unusual for this thing to be cut loose ahead of time,” Larcker said. “This is a big deal. The markets hinge on appropriate disclosure, following the process. You worry about some people getting the news earlier than others.”
The document was released in the middle of a press conference Google was holding to announce its new Chromebook offering in San Francisco, prompting several reporters to rush out to cover the results. Google ceased trading of its shares to make final touches to the document. The stock had earlier plunged after the publication of the release, which showed profit and sales that fell short of analysts’ projections.
R.R. Donnelley Investigates
Profit excluding some items was $9.03 a share, the Mountain View, California-based company said in a regulatory filing today. Excluding sales passed to partner sites, revenue was $11.3 billion. Analysts on average had estimated profit of $10.65 a share on sales of $11.8 billion.
Google shares fell $68.10, or 9 percent, to $687.39 at 1:39 p.m. in New York.
R.R. Donnelley fell as much as 6.5 percent to $10.14, the lowest price since May 23, after Google’s statement was released. R.R. Donnelley said it’s investigating the matter.
“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,” Chicago-based R.R. Donnelley said in a statement.
Google’s filing included the phrase “PENDING LARRY QUOTE,” just above a summary of results. The mishap quickly turned into a commonly discussed and joked-about theme on Twitter.
Google isn’t the only company to have its results released before planned. Microsoft Corp.’s earnings were released more than an hour before schedule in January, 2011, after Selerity Inc., a New Jersey market-information company, used software it developed to obtain Microsoft’s press release from a public area of the software maker’s site.