Google early earnings release stuns traders

• Premature release of Google earns surprises investors
• Shares halted after falling 9% as mishap goes viral on Twitter
• Google blames printer R.R. Donnelley for error

NEW YORK -- It was the premature earnings release that went viral. The ink wasn't dry on Google's third-quarter earnings report. It was incomplete, not ready for public consumption.

The company was still waiting for a comment from the search engine's CEO Larry Page. There was a blank space on the press release, where the CEO's comments would have gone.

That blank space quickly became an infamous tweet, trending on Twitter: "Pending Larry Quote."

And shocked and unprepared traders on Wall Street were hit with a widely anticipated earnings release just after 12:30 p.m. ET, instead of at the scheduled 4:30 p.m., a half hour after the market's close.

"I have never seen a company report earnings between noon or 1 p.m.," said Christine Short, an earnings analyst at S&P Capital IQ research firm.

Trading in shares of Google were halted nearly two-and-a-half hours in afternoon trading Thursday, before finishing the day down about 8% to $695, about where the stock was trading before the release snafu.

In a statement Thursday, Google blamed its financial printer R.R. Donnelley for hitting the button too early. Google said the printer, which is a leader in the field, acknowledged that it had filed the draft of the 8-K earnings statement without "authorization."

In a conference call with Wall Street analysts Google CEO Page Larry Page apologized for the uncertainty and inconvenience caused by the early release of their earnings numbers.

"I am sorry for the scramble earlier today," Page said. "(RR Donnelly) hit send on the release just a bit early."

In its own statement, Donnelley said it was "fully engaged in an investigation" to find out exactly what happened. Its shares closed down 2.5% Thursday.

"There should not be any liability, regulatory or by private litigation, for the unintended early release," said Jacob Frenkel, a securities litigation expert and partner at Shulman, Rogers, Gandal, Pordy & Ecker. "That said, we can be certain that someone will try to find a reason to sue, even if the securities law provide none."

Frenkel said that for years, earnings releases ahead of regulatory filings was standard practice. And the market had systems in place to respond to any premature releases, he added.

In recent times, earnings typically are released before or after the market closes, giving all investors, retail and institutional, and traders time to digest the results and hear what management says about the quarter.

Thursday traders were caught off guard. J.J. Kinahan, chief derivatives strategist at T.D. Ameritrade, got a frantic call from one of his traders while he was in a cab in New York City. heading to an appointment.

"I got a phone call immediately after the earnings were released," says Kinahan. "The trader said, 'this is crazy.' Obviously, this has taken everyone by surprise."

Despite Google's damage-control efforts, the harm of the premature release was made worse by results that missed expectations.

It's just the latest trading snafu on Wall Street. In May 2010, there was the so-called "flash crash." Then came the trading glitches during Facebook's high-profile IPO a few months back.

Still, Kinahan doesn't expect the type of crisis of confidence or lack of trust in the system to rival those high-profile mishaps. "It won't have a psychological impact," he predicts.

Traders might not have had their stock positions aligned, as the release was expected four hours later, he adds.

"You end up with risk that you were not expecting," says Kinahan.