Ragan's PR Daily: Dow Scrambles After Releasing Layoffs News Prematurely
A PR error this week forced Dow Chemical to release its third-quarter earnings early.
According to Reuters, Dow had planned to announce layoffs today, along with its third-quarter earnings, but it scuttled that plan after a draft copy of the press release about the restructuring was accidentally sent to Bloomberg News on Tuesday night.
Instead of a Thursday release, the official layoff announcement and earnings report came late Tuesday evening.
Dow did not respond to PR Daily's email, so it's unclear exactly what took place in the company's public relations or investor relations departments on Tuesday leading to the errant draft press release.
A spokesman for Dow told The New York Times, "We had an inadvertent premature release, and we moved quickly to take care of it.'
Jeff Corbin, CEO of KCSA Strategic Communications, speculated that someone made a mistake.
"But [Dow] made the right call releasing both [pieces of news] early,' he added. "Otherwise there would have been speculation all day during trading on Wednesday.'
Corbin's firm handles investor relations, as well as public and media relations and marketing.
Dow, the largest chemical maker in the U.S. by sales, plans to cut roughly 2,400 jobs and close 20 manufacturing plants, even though its third-quarter earnings beat analysts' expectations. The reductions amount to a cost savings of $500 million.
The company's stock price jumped as a result of the restructuring news.
In an earnings call on Wednesday, Dow Vice President of Investor Relations Doug May mentioned the mishap and offered a brief explanation.
"This [our earnings press release] was earlier than usual due to an inadvertent and premature release of our restructuring announcement,' he said.
Dow posted the released to its website and on Business Wire, according to May.
The chemical maker was not alone this week-and last week-in committing an investor relations gaffe. According to the Times, the automaker Daimler accidentally sent an email to roughly 50 reporters on Tuesday around 1 p.m. with the subject line, "Daimler's earnings once again at a high level.' The staffer responsible for the errant blast sent a follow-up email asking reporters to ignore the previous one, the Times reported.
Dow's mistake is also similar to a recent blunder by Google.
The search giant had planned to release its disappointing third-quarter numbers last Thursday after Wall Street's closing bell, but due to an error Google blames on its financial printer R.R. Donnelly, the press release appeared on the Securities and Exchange Commission's website around 12:30 p.m. ET. The release included the placeholder line, "PENDING LARRY QUOTE,' which refers to Google CEO Larry Page.
Google shares on the Nasdaq exchange plummeted as a result of the early release, and Page gave a brief apology during an earnings call later in the day.
According to Corbin, Google's mistake is a result of failing to adhere to best practices in investor relations. Unlike Dow, which files its earnings reports with the SEC and a newswire, Google simply files its report with the government and then posts it to its website, skipping the newswires.
"Google's mistake could have been avoided if they'd used a traditional newswire service,' Corbin said.
According to Corbin, Dow and Google offer lessons for corporations:
Follow best practices in investor relations
"Anyone in the [IR] business should step back and look at their practices and decide if they're doing it the right way or our way,' Corbin said. "There's something to be said about doing things the old-fashioned way, as opposed to being provocative.'
Integrate investor relations
and public relations. At many companies, PR and IR are separate functions. "They might sit in separate buildings and not talk to one another,' Corbin said. Meanwhile, other organizations realize the two functions go hand in hand, so those companies encourage the departments to talk to each other.
Companies that commit such gaffes probably take too long to dot their i's and cross their t's, according to Corbin. "There's no reason to wait until the final hour to finalize the quote from the CEO,' he said. "It's the last-minute scramble that causes errors and mistakes.'
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