Google filing error shocks investors, exposes process

SAN FRANCISCO/NEW YORK (Reuters) - R.R. Donnelley & Sons Co handles thousands of securities filings a year for corporate clients in a routine process that is invisible to most investors. On Thursday Google and its shareholders found out just what happens when that process goes wrong.
Google issued a statement blaming Donnelley, its filing agent, after the Internet search company's quarterly results were released by the U.S. Securities and Exchange Commission hours ahead of schedule.
Earnings were far less than analysts expected and Google shares immediately plunged as much as 10.5 percent, knocking $26 billion off its market capitalization - the equivalent, as it happens, of about 13 R.R. Donnelleys.
It was quickly obvious that a mistake had been made -- the second paragraph of the filing said "PENDING LARRY QUOTE" instead of an actual quote from Google CEO Larry Page -- but it was not clear why.
Within minutes, though, an unknown prankster set up a "PendingLarry" Twitter feed to hypothesize what the missing quote might be. Among the highlights: "Man, our privacy was WAY violated today."
Donnelley shares lost more than 5 percent after Google started pointing the finger, though they recovered later in the day. The company did not respond to a call for comment, but issued a statement to CNBC in which it said it was investigating the circumstances of the release.
Best known as a provider of printing services, Donnelley is also the top SEC filing agent in the country, handling more than 75,000 submissions this year as of mid-October, according to SECInfo.com.
Filing agents like Donnelley take paper documents and convert them for submission to the SEC in the appropriate format. The company also owns the filing portal EDGAR Online.
WHO GOOFED?
It is far from the first time a company's earnings have somehow gotten out early.
In late 2010 and early 2011, inadvertent releases - usually by a misplaced release on a website - plagued companies like Walt Disney Co (NYS:DIS) and Microsoft Corp (NSQ:MSFT).
The common thread in all of those cases is that investors who are not in the right place at the right time to see the news may suffer for it.
"Some who didn't get a chance to sell will try to, and others will be looking for bargains. I'm sure a lot of Google owners were caught off guard," said Randy Frederick, managing director of active trading and derivatives for Charles Schwab in Austin, Texas.
After the first question of "who goofed?" was sorted out Thursday afternoon, the second one being asked by investors was "can we sue?"
"Everyone is trying to figure out if there's any legal issue with respect to R.R. Donnelley. Google is halted, Donnelley is down big-time on the news since they're allegedly not supposed to have released the information," said Michael Matousek, senior trader at U.S. Global Investors in San Antonio.
But one plaintiffs lawyer who sues companies on behalf of investors said shareholders would not have a claim against either Google or R.R. Donnelley because the earnings disclosure was likely a mistake.
"There's no fraudulent intent here," said Reed Kathrein with Hagens Berman.
R.R. Donnelley may not be entirely off the hook with Google, however. The company could have a negligence claim to recover any additional costs it incurred in responding to the incident, Kathrein said.
Any potential damages against R.R. Donnelley could be limited, though, by the contract between the two companies.
Late Thursday, Google filed an amended press release with the missing quote and a confirmation that the figures in the original were accurate.
R.R. Donnelley shares were up 2 cents at $10.87 in late trading. Google was down 8.1 percent to $693.94 after trading resumed.

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Who Owns America’s Debt?

As the U.S. continues to rack up more than $1 trillion of new debt every year, Americans are beginning to worry about who we owe this money to and how much power our creditors have over us.
According to Barry P. Bosworth, a senior fellow at the Brookings Institution, our two biggest foreign creditors are Japan and China.
Although it may seem as though our debt to these countries renders us a puppet on strings, Bosworth says this fear is overblown. The U.S. market is very important to China's economy, so China would be loathe to do anything that might exacerbate tensions or disrupt trade between the two countries. And the same can be said for Japan. China owns $1.15 trillion of U.S. government debt -- more than any other country -- but U.S. taxpayers actually owe less money to China compared to recent years. China holds 10% of U.S. Treasuries, down from 12% two years ago.
Related: China's Slow Growth 'Marks An End of an Era' But No Hard Landing
And what about all the anti-China rhetoric that we hear about on the campaign trail?
Republican Presidential Nominee Mitt Romney has been promising the country that he will declare China a "currency manipulator" on the first day of his presidency--and then enact tariffs as necessary until he forces China to level the trading playing field. Is that something that Romney is actually likely to do if he gets elected?
No, says Bosworth.
Tough talk with respect to China has become standard rhetoric for any presidential challenger. If and when Romney becomes president, his position will likely mellow.
Bosworth also says that the problem with the U.S.-China trade relationship is not, as is commonly believed, that China doesn't play fair. China has actually addressed lots of its unfair practices over the past decade, Bosworth says, while the U.S. is still pursuing the same old self-destructive habits. Until we stop consuming so much and start producing more, Bosworth says, we're in no position to demand anything.

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Earnings from McDonald's, Microsoft sink stocks

Poor earnings reports from three companies in the Dow Jones industrial average — Microsoft, General Electric and McDonalds — sent indexes down sharply Friday, marking a sour end to an otherwise strong week in the stock market.
McDonald's led a broad drop in the Dow, falling 3 percent. The Dow was down 151 points at 13,397 shortly after noon.
"I'm concerned about corporate earnings, but I'm not alarmed yet," said Doug Cote, chief market strategist at ING Investment Management in New York.
Cote cautions that it's still early in reporting season, but what's worrying is that companies have reported an overall drop in earnings so far. "And once you get one quarter of negative earnings, it's a precursor," he said. "It's the cockroach theory: if you find one, there's probably many more."
The Standard & Poor's 500 sank 17 points to 1,440 and the Nasdaq composite dropped 52 points to 3,020. All 10 industry groups in the S&P 500 fell, led by materials and technology stocks.
McDonald's profit sank as a strong dollar hurt international results, which account for two-thirds of its business. The fast-food giant's stock lost $3.51 to $89.35.
Microsoft's income fell 22 percent as PC sales took a dive and as troubles in Europe took their toll. Its stock lost 67 cents to $28.82.
General Electric, another economic bellwether, fell 3 percent. The company reported stronger profits early Friday but its revenue missed Wall Street's expectations. Orders for new equipment and services sank, mainly because wind turbine orders have fallen because a key U.S. federal subsidy for wind power expires at the end of the year.
GE's stock lost 60 cents to $22.21.
Analysts currently expect companies in the S&P 500 to post their worst earnings results since the third quarter of 2009, according to S&P Capital IQ. Banks and consumer discretionary companies are projected to report the best growth. Analysts expect companies dealing in metals and other materials to report the worst results, followed by energy companies.
But it's technology companies like IBM, Intel and Google whose weak results have grabbed the most attention so far.
Weak earnings from Google and a rise in claims for unemployment benefits helped pull the stock market lower Thursday. That snapped a four-day run of gains for the Dow. Google fell again Friday, giving up $14.14 to $680.86.
The Dow is still up 0.6 percent for the week. The S&P 500 up is up 0.8 percent.
In other Friday trading, the yield on the 10-year Treasury note slipped to 1.77 percent from 1.83 percent late Thursday.
Among other stocks making big moves, Chipotle Mexican Grill plunged 14 percent after the burrito chain forecast that revenue growth would slow sharply next year. The stock had been a favorite among investors thanks to super-fast growth in recent years. The stock fell $41.32 to $244.61.

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McDonald's Canada Reveals How They Make Famous Fries

McDonald's Canada is at it again, demystifying their french fry recipe "from the farm to all the way to the fryer."
In their new behind-the-scenes video, Scott Gibson, manager of the company's supply chain, takes customer questions on their world-famous fries.
Gibson addresses the first question asking whether or not the potatoes used by the fast food restaurant are real. Standing in the middle of the Levesque farm with farmer Angelo Levesque, the two discuss how the potatoes are harvested and sorted at the farm. Then they are then brought to McCain, the company's fries supplier, to be prepped before heading to stores.
SLIDESHOW: Fast Food Ads vs. Reality: How Do They Size Up?
Mario Dupuis, production manager at McCain, describes how they prepare the fries by washing the potatoes to remove the rocks and the dirt and put them through a "peeling system."
Afterwards, they are cut and blanched "to remove the natural sugars from the strips, this will prevent some variation in the color once we cook the product," said McCain.
Next they are washed in a textural solution to give it the "nice even coat we see in the restaurants," said McCain, adding they also use an ingredient on the strips to prevent the fries from greying or oxidizing. Afterwards, they are then dried and fried for 45 to 60 seconds. Finally, they are frozen, packaged and shipped to stores.
Once in stores, the fries are deep-fried in 100 percent vegetable oil. They are salted with about 1 tablespoon of salt per four orders of medium fries. For those concerned about salt intake, Gibson suggests that customers can order their fries without the salt.

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US housing construction up 15 percent in September

 U.S. builders started construction on single-family homes and apartments in September at the fastest rate since July 2008, a further indication that the housing recovery is strengthening.
The Commerce Department said Wednesday that builders broke ground on homes at a seasonally adjusted annual rate of 872,000 in September. That's an increase of 15 percent from the August level.
Applications for building permits, a good sign of future construction, jumped nearly 12 percent to an annual rate of 894,000, also the highest since July 2008.

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The strength in September came from both single-family construction, which rose 11 percent, and apartments, which increased 25.1 percent.
Construction activity is now 82.5 percent higher than the recession low hit in April 2009. Activity is still well below the roughly 1.5 million rate that is consistent with healthier markets.
Still, the surge in construction suggests builders believe the housing rebound is durable.
Builder confidence reached at a six-year high this month, according to a survey by the National Association of Home Builders. The group's index of builder sentiment rose to a reading of 41. While that's still below the level of 50 that signals a healthy market, it has steadily climbed over the past year from a reading of 17.
Sales of new and previously owned homes have been slowly improving this year, and home prices are starting to show consistent gains.
Record-low mortgage have encouraged more people to buy. And the Federal Reserve's aggressive policies could push long-term interest rates even lower, making home-buying affordable for the foreseeable future.
Housing is expected to keep improving next year. But many economists say economic growth will stay muted until companies step up hiring and consumers start spending more.
Though new homes represent less than 20 percent of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the home builders group.

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New York gunman left note declaring plan to kill people

A gunman who killed two volunteer firefighters and wounded two others in a Christmas Eve ambush in upstate New York left a typewritten note saying he planned to burn down his neighborhood and start "killing people," authorities said on Tuesday.
The gunman, William Spengler, 62, opened fire on volunteer firefighters who responded to a house fire he deliberately set early on Monday morning in Webster, New York, a suburb of Rochester, authorities said.
Spengler shot and killed himself in an ensuing gunfight with police. He had spent 17 years in prison for beating his 92-year-old grandmother to death with a hammer in 1981, authorities said.
Police said Spengler set the fire, laying a trap for the firefighters, and began shooting when they arrived.
He left a typewritten note describing his intent, Webster Police Chief Gerald Pickering said at a televised news conference.
"I still have to get ready to see how much of the neighborhood I can burn down and do what I like doing best, killing people," Pickering read from the gunman's statement.
Investigators had found human remains in Spengler's burned-out house, where he lived with his sister, Cheryl Spengler, 67, Pickering said. The remains are assumed to be the sister's and a medical examiner will determine the cause of death.
"A CLEAR AMBUSH"
Spengler started shooting at the arriving firefighters before they got out of their fire truck, Pickering said. He shot out the truck's windshield as they tried to drive away, he said.
"This was a clear ambush on first responders," Pickering said. Police fired back at the gunman, he said. "It was a combat condition. They were shooting at muzzle flash," Pickering said.
Spengler was in a natural depression in an embankment near a tree when he opened fire, he said.
His motive for attacking firefighters remained unknown, Pickering said. It may have been related to contributions his mother had made to the local fire department, he said.
Pickering said he was not sure what the victims were shot with, but said Spengler had an "arsenal of ammunition" and three weapons - a Smith & Wesson .38 caliber revolver, a pump-action Mossberg shotgun, and a .223 Bushmaster rifle with a flash suppressor.
The same model Bushmaster rifle was used in the killing of 20 students and six teachers in Newtown, Connecticut, on December 14.
Authorities with the Bureau of Alcohol, Tobacco, Firearms and Explosives were checking on the origin of the weapons, he said.
As a convicted felon, Spengler could not legally own guns. Pickering said authorities were examining potential links between the weapons and thefts of guns in the county.
The firefighters killed in the attack were Lieutenant Michael Chiapperini and Tomasz Kaczowka, authorities said.
The injured firefighters were identified as Joseph Hofsetter and Theodore Scardino. Both men were listed in guarded condition at Strong Memorial Hospital in Rochester.
An off-duty police officer was wounded by shrapnel as he drove past the scene. The officer was treated at a hospital and released.
Seven homes in the neighborhood were destroyed by the fire, and two were uninhabitable, Pickering said.

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Link between pot, psychosis goes both ways in kids

 Marijuana (cannabis) use may be linked to the development of psychotic symptoms in teens - but the reverse could also be true: psychosis in adolescents may be linked to later pot use, according to a new Dutch study.
"We have focused mainly on temporal order; is it the chicken or the egg? As the study shows, it is a bidirectional relationship," wrote the study's lead author Merel Griffith-Lendering, a doctoral candidate at Leiden University in The Netherlands, in an email to Reuters Health.
Previous research established links between marijuana and psychosis, but scientists questioned whether pot use increased the risk of mental illness, or whether people were using pot to ease their psychotic symptoms, such as hallucinations and delusions.
"What is interesting in this study is that both processes are going on at the same time," said Dr. Gregory Seeger, medical director for addiction services at Rochester General Hospital in upstate New York.
He told Reuters Health that researchers have been especially concerned about what tetrahydrocannabinol (THC), the active property in pot, could do to a teenager's growing brain.
"That's a very vulnerable period of time for brain development," and individuals with a family history of schizophrenia and psychosis seem to be more sensitive to the toxic effects of THC, he said.
A 2010 study of 3,800 Australian teenagers found that those who used marijuana were twice as likely to develop psychosis compared to teens who never smoked pot (see Reuters Health article of March 1, 2010 here:).
But that study also found that those who suffered from hallucinations and delusions when they were younger were also more likely to use pot early on.
CHICKEN v. EGG
For the new study, published in the journal Addiction, the researchers wanted to see which came first: pot or psychosis.
Griffith-Lendering and her colleagues used information on 2,120 Dutch teenagers, who were surveyed about their pot use when they were about 14, 16 and 19 years old.
The teens also took psychosis vulnerability tests that asked - among other things - about their ability to concentrate, their feelings of loneliness and whether they see things other people don't.
Overall, the researchers found 940 teens, or about 44 percent, reported smoking pot, and there was a bidirectional link between pot use and psychosis.
For example, using pot at 16 years old was linked to psychotic symptoms three years later, and psychotic symptoms at age 16 were linked to pot use at age 19.
This was true even when the researchers accounted for mental illness in the kids' families, alcohol use and tobacco use.
Griffith-Lendering said she could not say how much more likely young pot users were to exhibit psychotic symptoms later on.
Also, the new study cannot prove one causes the other. Genetics may also explain the link between pot use and psychosis, said Griffith-Lendering.
"We can say for some people that cannabis comes first and psychosis comes second, but for some people they have some (undiagnosed) psychosis (and) perhaps cannabis makes them feel better," said Dr. Marta Di Forti, of King's College, London, who was not involved with the new research.
Di Forti, who has studied the link between pot and psychosis, told Reuters Health she considers pot a risk factor for psychosis - not a cause.
Seeger, who was also not involved with the new study, said that there needs to be more public awareness of the connection.
"I think the marijuana is not a harmless substance. Especially for teenagers, there should be more of a public health message out there that marijuana has a public health risk," he said.
Griffith-Lendering agrees.
"Given the severity and impact of psychotic disorders, prevention programs should take this information into consideration," she said.

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Central African Republic rebels seize central town, defying foreign troops

 Rebels in Central African Republic seized the central town of Kaga Bandoro on Tuesday despite the presence of foreign troops meant to support the government, a government official said.
The fall of the town, 333 km (207 miles) north of the capital Bangui, came hours after the Seleka rebel alliance said they would suspend their push and means they now have a firm grip on the north and east of the fragile nation.
"They took the town after a short battle despite the surprising lack of action from the Chadian (soldiers)," Rigobert Enza, who works in Kaga Bandoro's mayor's office, told Reuters after he fled to Sibut, the next town to the south.
Foreign soldiers in Kaga Bandoro include Chadians dispatched in the last few weeks to help Bangui tackle the latest rebellion as well as members of a regional stabilization force made up of soldiers from across Central Africa.
Neither rebel nor government officials were available for comment. But the daughter of a second local government official in the town said she had received a call from her father confirming the town had been occupied by rebels.
CAR, a mineral-rich but land-locked former French colony, has been plagued by insecurity since independence in 1960.
President Francois Bozize came to power in 2003 after a brief war and has won two elections since then.
But facing several internal rebellions and the spill-over from conflicts in neighboring Chad and Sudan, he has struggled to stabilize the nation.
"The situation has become very serious," a senior official in the president's camp told Reuters, asking not to be named.
The rebels are made up of fighters from several previous rebel groups and complain that Bozize has failed to stick to the terms of a 2007 peace deal.

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5 Ways This Obama Inauguration Will Be Different

1. Fewer People
President Obama’s inauguration as the first African-American president drew 1.8 million people to the National Mall—some of whom flew across the country and the world to be in D.C. for Obama’s big day. Second inaugurations tend to be more low-key, and Obama’s will be no exception. His second is expected to draw only half as many people, according to the Washington Metropolitan Area Transit Authority. That’s probably a good thing for the National Mall: After Obama’s 2009 swearing in, the National Park Service and its partners cleaned about 100 tons of debris—including blankets, sleeping bags, and lawn chairs.
2. Downsized Celebrations
Although Obama’s first inauguration took place as the economy was cratering, that didn’t dampen the festivities. Bruce Springsteen and Bono rocked on the Mall, and the new president and first lady kicked up their heels at 10 official inaugural balls. But after a prolonged recession and an expensive reelection campaign, the president’s inaugural committee has downsized its plans. There could be as few as two official inaugural balls in 2013, according to The Wall Street Journal, and they’re slated to take place in the staid Washington Convention Center. It remains to be seen whether outside groups—like private companies and advocacy organizations in town—will similarly downsize their own party plans. As in 2009, Obama’s second inauguration will kick off with a day of community service.
3. More Corporate Money
Presidential Inauguration Committees always raise money to pay for the parade, the balls, and other festivities. Back in 2009, Obama sought to limit the influence of outside cash: He refused to accept corporate contributions, and he capped individual donations at $50,000. Four years later, big money is getting a big embrace. Obama is accepting unlimited donations from corporations, although he’s still not accepting donations from super PACs and lobbyists, The New York Times reports. The president’s finance team is offering groups that donate $1 million a special package of inaugural activities; individuals can contribute $250,000 to get the same package.
4. Cementing History, Not Making History
Obama’s reelection proves that the 2008 election wasn’t a fluke. His first victory was groundbreaking; his second gives him time to cement his legacy. Obama’s second inauguration will still allow history buffs to draw some powerful connections, however. He’ll be sworn in three weeks after the 150th anniversary of the Emancipation Proclamation and will deliver his second inaugural address on Martin Luther King Day. It might be hard for Obama (or his speechwriters) to resist referencing the civil war or the civil-rights movement in his remarks.
5. Two Swearing-In Ceremonies
The Constitution requires that new presidents be sworn in on Jan. 20, but that falls on a Sunday this year. It’s long been deemed inappropriate to host a showy inauguration ceremony on the Sabbath, so that means Obama gets to take the oath of office twice: he’ll be sworn in in a private ceremony at the White House on the 20th, and will take part in a big public ceremony at the Capitol on the 21st. The last president to take two oaths in this way?  Ronald Reagan, in 1985.

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Egypt approves constitution drafted by Mursi allies

 Egyptian voters overwhelmingly approved a constitution drafted by President Mohamed Mursi's allies, results announced on Tuesday showed, proving that liberals, leftists and Christians have been powerless to halt the march of Islamists in power.
Final elections commission figures showed the constitution adopted with 63.8 percent of the vote in the referendum held over two days this month, giving Mursi's Islamists their third straight electoral victory since veteran autocrat Hosni Mubarak was toppled in a 2011 revolution.
Opposition groups had taken to the streets to block what they see as a move to ram through a charter that mixes politics and religion dangerously and ignores the rights of minorities.
Mursi says the text - Egypt's first constitution since Mubarak's fall - offers enough protection for minorities, and adopting it quickly is necessary to end two years of turmoil and political uncertainty that has wrecked the economy.
"I hope all national powers will now start working together now to build a new Egypt," Murad Ali, a senior official in the Muslim Brotherhood's Freedom and Justice Party, told Reuters.
"I see this as the best constitution in Egypt's history."
In a sign that weeks of unrest have taken a further toll on the economy, the government ordered new restrictions on foreign currency apparently designed to prevent capital flight. Leaving or entering with more than $10,000 cash is now banned.
Two years since waves of unrest broke out across the Middle East and North Africa - sweeping away long-entrenched rulers in Tunisia, Libya and Yemen as well as Egypt - well-organized Islamist parties have emerged as the main beneficiaries.
Urban secularists and liberals who were behind the revolts complain that their success has been hijacked.
"We need a better constitution," said Khaled Dawood, an opposition spokesman. "It does not represent all Egyptians."
Mursi's opponents say the new constitution could allow clerics to intervene in lawmaking, while offering scant protections to minorities and women. Mursi dismisses those criticisms, and many Egyptians are fed up with street protest movements that have prevented a return to normality.
Immediately after the announcement, a small group of protesters set tires on fire and blocked traffic near the central Tahrir square, the cradle of Egypt's uprising, but there were no immediate signs of violence or major demonstrations.
Washington, which provides billions of dollars a year in military and other support for Egypt and regards it as a pillar of security in the Middle East, called on Egyptian politicians to bridge divisions and on all sides to reject violence.
"President Mursi, as the democratically elected leader of Egypt, has a special responsibility to move forward in a way that recognizes the urgent need to bridge divisions," State Department spokesman Patrick Ventrell said. He noted that many Egyptians had voiced "significant concerns" over the constitutional process.
WORSENING ECONOMY
The government says its opponents are worsening the economic crisis by prolonging political upheaval. It has pledged to impose unpopular tax increases and spending cuts to win a loan package from the International Monetary Fund.
The ban on travelling with more than $10,000 in cash followed a pledge by the central bank to take unspecified measures to protect Egyptian banks. Some Egyptians have begun withdrawing their savings in fear of more restrictions.
"I am not going to put any more money in the bank and neither will many of the people I know," said Ayman Osama, father of two young children.
He said he had taken out the equivalent of about $16,000 from his account this week and planned to withdraw more, adding that he had also told his wife to buy more gold jewellery.
The "yes" vote paves the way for a parliamentary election in about two months, setting the stage for another battle between surging Islamists and their fractious opponents.
The final result, announced by the election commission, matched - to the last decimal place - an earlier unofficial tally announced by Mursi's Muslim Brotherhood.
But the opposition said it was disappointed - it had appealed for the result to be amended to reflect what it described as major vote violations during the two-round vote.
Officials said there were no violations serious enough to change the result significantly. "We have seriously investigated all the complaints," said judge Samir Abu el-Matti of the Supreme Election Committee. The final turnout was 32.9 percent.
SENSE OF CRISIS
The referendum has sharpened painful divisions in the Arab world's most populous nation and a growing atmosphere of crisis has gripped Egypt's polarized society.
Anxiety about the economy deepened this week when Standard and Poor's cut Egypt's long-term credit rating. Prime Minister Hisham Kandil told the nation of 83 million on Tuesday the government was committed to fixing the economy.
"The main goals that the government is working towards now is plugging the budget deficit, and working on increasing growth to boost employment rates, curb inflation, and increase the competitiveness of Egyptian exports," he said.
The referendum follows Islamist victories in parliamentary and presidential elections, representing a decisive shift in a country at the heart of the Arab world where Mursi's Muslim Brotherhood was suppressed for generations by military rulers.
However, secularist and liberal opposition members hope they can organize better in time for the next parliamentary vote.
Hossam El-Din Ali, a 35-year-old newspaper vendor in central Cairo, said he agreed the new constitution would help bring some political stability but like many others he feared the possible economic austerity measures lying ahead.
"People don't want higher prices. People are upset about this," he said. "There is recession, things are not moving. But I am wishing for the best, God willing.

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