Counterparties: Earnings #fail

October 25, 2012

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The routine is simple: four times a year, public US companies release their results (54 companies reported today alone). Traders react, analysts weigh in, the media explains and we all move along, ready to repeat the whole thing in three months. How hard can it be? Plenty hard, it turns out.

First out of the blocks this week was Google. Or, rather, RR Donnelley, the financial printer that accidently filed Google’s earnings release early, incomplete and without authorization; the shares had to be suspended for most of the afternoon.

Then it was Dow’s turn. As Michelle Leder writes, someone at the chemical giant inadvertently e-mailed Bloomberg News a layoff announcement. Daimler committed a similar, albeit lesser, mistake, when a communications staffer emailed a draft earnings release to reporters: “It was just a mistake. I realized it instantaneously…instead of saving as a draft, I pushed the send button”.

And yesterday, Factset Research garbled the facts in IAC’s results. IAC said it expected to report a loss in its “media and other” division in 2013 — but as if out of a bad game of telephone, Factset, which offers company analysis and data to investors, somehow heard that the entire company expected to report an overall loss in 2013 and relayed that negative news to clients. Once again, the shares had to be halted.

In a world of algo-driven high-frequency trading, these quaint screw ups are weirdly comforting. They don’t have much long-term effect on stock prices, but they are a reminder that a large part of the market is still subject to very human errors. — Ben Walsh

On to today’s links:

Must Read
Taxpayer-owned Freddie Mac intentionally made it harder for millions to refinance their mortgages – Jesse Eisinger

Official Statements
CEOs’ deficit manifesto is “gross self-interest masquerading as public statesmanship” – Felix

Tax Arcana
Caribbean tax shelters find themselves with crippling deficits – Bloomberg

Crime And/Or Punishment
Former Goldman director Rajat Gupta gets 2 years in prison for insider trading – Dealbook

“What Silicon Valley still calls ‘Disruption’ has evolved into something very sinister indeed” – Paul Carr

Citigroup’s biggest challenge: It has one of the least productive workforces on Wall Street – Bloomberg
Sir David Walker is planning a “clean sweep” of Barclays’ board – FT

The myth that consumption inequality is a myth – Mark Thoma
The nature of UK austerity – Tyler Cowen
Why technology won’t kill jobs – Ken Rogoff
Debt-based systems are inherently inflexible and lead to crises” – Aleph Blog

There’s one bit of economic data that’s still in recession territory – Tim Duy

The Greg Smith Files
Greg Smith shows off his mastery of Control+C – Bess Levin

Public pensions’ “vital signs are strong” – Pensions & Investments

Golden parachutes make acquisitions more likely – Lucian Bebchuk

EU Mess
Europe’s banks are still far too big, by the way – Quartz

Lloyd Blankfein: “Nobody can flagellate themselves as well as Goldman” – CNBC


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