FRIDAY 19 OCT 2012 11:58 AM


What happens when the world’s favourite search engine and one of the world’s most trusted brands gets it wrong? Very wrong.

Billions are lost. Stocks freefall. Crisis management teams leap into action. The name that the entire world knows and relies on is in the news; only now it’s for the $22 billion missing from its market value.

Google’s inadvertent release of an earnings report early outlining a 20 per cent decline in profits erased nine per cent of the company’s market value in a frantic two hour period before trading was suspended.

The company has come under criticism for the lack of a quote from CEO Larry Page which would have better prepared Google’s investors for the shock of the announcement. However, Andrew Harvey a media and crisis management expert and co-founder of HarveyLeach says that Page’s crisis management has been effective in the aftermath.

Page said to analysts on a conference call, “I’m sorry for the scramble earlier today. As our printers have said, they hit send on the release just a bit early.”

Harvey says, “To me, that is an ideal company statement. I’m sorry, this is what happened. Bang. All you need to say...Given that a mistake occurred, I think they reacted pretty well.”

Crises affect reputation, as does the way in which a company manages that crisis. In May 2010, SABMiller, the world’s second-largest beverage company, was hit with a similar crisis. In response to the announcement of a disappointing profit margin, the company’s stock dropped by six per cent.

The Google error stemmed only partially from its profit loss. The press and investors alike have lambasted the search giant for its preemptive mishandling of the press release in question. But Google is a worldwide brand. RepTrak ranked Google as the sixth-most trusted brand in 2012. It also received the fourth-best and third-best rankings for leadership and performance, respectively.

“I think long term there will probably not be much damage,” Harvey says. “Obviously it will cause analysts to study the figures very carefully...but Google is a huge monster business and can easily fight this battle itself."

Google, financially, has been hit by the massive stock market loss. In terms of reputation, however, it may be too early to tell. Long-term damage will be determined by the interpretation of Google’s finances, not by its reputation due to Page’s succinct and swift attempt to reestablish smooth investor relations.