Stories by Adam Levy
by Adam Levy
A recent item on Talking Biz News featured an anonymous former investment banker saying that “markets never move in response to a rating agency change….Never. Ever.” The ex-banker went on to intimate that you could spot a clueless business journalist if he or she ascribes a market move to a rating agency change.
Well, maybe that’s why the banker is an ex-banker – or, hopefully, not on the hiring committee of a financial journalism institution. The banker shouldn’t speak in such stark absolutes.
On one hand, I get the point. Rating agencies react to news; they take time to process information. Markets anticipate events. Yes, true, we know all that. I’m not going to defend rating agencies.
But to say “never” and “ever” overstates things. Markets do react to credit rating changes. And the reporters who cite the credit ratings as a reason for market declines might be correct and doing their jobs.
Let’s look back to August 2011 when Standard & Poor’s cut the credit rating of the United States. Here’s the lead from the Wall Street Journal: “The downgrade of the U.S.’s credit rating sparked a global selloff on Monday, pushing the Dow Jones Industrial Average to its sharpest one-day decline since the financial crisis in 2008.” Not sure I’d tag E.S. Browning, the author of this article, as a clueless reporter. Ever.
Now, a nuanced observer might note that the downgrade itself didn’t spark the stock rout. The downgrade merely underscored concerns about an economic slowdown that the ratings agency was a bit slow to recognize. That’s what Bloomberg said in its article that day: “U.S. stocks sank the most since December 2008, while Treasuries rallied and gold surged to a record, as Standard & Poor’s reduction of the nation’s credit rating fueled concern the economic slowdown will worsen.”
The point remains that these reporters needed to cite the downgrade as the spark that led to the rout. Not doing so would have been irresponsible and ignoring the news of the day. When I edited market or company news coverage, I would have laughed (or yelled?) at those who would ignore the news of the day.
When I read the banker’s rant, I couldn’t help but think this is another example of investment banking condescendence. Many like to think they’re the smartest people in the room and ahead of the market. That’s what they sell to clients.
But others follow the ratings agencies and react to their downgrades. And a good reporter is going to pick up on that and write about it.
by Adam Levy
The gloves came off last week after the New York Times hammered Tesla Motors’ Model S car in an article.
Tesla Chairman and CEO Elon Musk used data logged by the car to conduct a point-to-point rebuttal of the negative review.
The donnybrook was, if not enjoyable, unusual. Rarely does a CEO go to such lengths to rebut an article. But, this isn’t the first time for Musk who sued the UK TV show “Top Gear” after a segment a couple of years ago.
A couple of lessons for companies and their PR people jumped out at me.
First, do your homework before agreeing to an interview/meeting.
Here’s a snippet from Musk’s response. “We assumed that the reporter would be fair and impartial, as has been our experience with The New York Times, an organization that prides itself on journalistic integrity. As a result, we did not think to read his past articles and were unaware of his outright disdain for electric cars.”
I get the swipe at the reporter, but why would a company not do basic research? How complicated is it to search for clips to see what this reporter has covered in the past and whether there is a putative bias? If a reporter has even the whiff of an agenda I would advise any of my clients to avoid siting down to chat with him or her, whether on- or off-the-record. And I wouldn’t go out of my way to provide access to the product to him or her either.
Second, reporters should never have an agenda. I’m not suggesting that John Broder had one. He is, in years of reading him, a terrific journalist. But the lesson here is broader than who is right in this circumstance. If you cover a company, you need to have an open mind, and keep it through the course of your coverage.
I recognize that columnists need to opine – that’s what they do. When I read a car review I want to know if the ride is stiff, or if the motor purrs like a kitten (or whatever cars are supposed to do). But it’s a real disservice to readers if that review is biased by a bad experience in the past or a predetermined opinion. I don’t want your bias to become my bias; I want your informed opinion to set the stage for mine.
Finally, pick your battles. If you do have an agenda, or are you’re a litigious company, you need to check out your target before you engage in battle. I don’t see how either side “wins” here. Musk’s posting appeared pretty damning and then the Times responded methodically to each of his detailed assertions.
I think they both lose. A few months (weeks) from now, I won’t remember the details of the argument – but I’ll think a little less of each side.
by Adam Levy
Hewlett-Packard Co. reacted swiftly to the news that Dell was going private in a $24.4 billion buyout.
“Dell has a very tough road ahead,” the company said in a statement it issued. “Leveraged buyouts tend to leave existing customers an innovation at the curb.”
Now, I know these two companies have a history of sparring in public. But this latest salvo seems so unnecessary. After all, it’s not like HP hasn’t had a few boardroom disasters of its own. Carly Fiorina stepped down in 2005 amid an upheavel. Patricia Dunn was forced out from the board after a disastrous investigation into boardroom leaks that included spying on the phone records of reports and directors. I’m going to stop after mentioning these two – but as anyone who follows HP knows, the list of ignominious decisions, acquisitions and missteps is a long, long one.
Why didn’t HP just decline comment or keep its comments to itself – and let its actions speak for the corporation? You want to pounce on the competition in a moment of perceived weakness? Fine, go out-innovate or outsell Dell.
I can think of several different businesses – one that I covered for many years and one that I worked for – that would never publicly speak of the competition. These businesses were invigorated by the competition. They were keenly aware of all developments. They reacted to any signs of weakness.
But, they took the high road and kept mudslinging out of the public record. In fact, neither the business I covered nor the one I worked for ever publicly mentioned the competition’s name. It was always Brand X.
I’m not trying to defend Dell here. Sure, I can see how the LBO might leave the company vulnerable. I don’t blame HP for trying to pounce on Dell, either. They should be pouncing. While Dell’s management is focused on restructuring the company, it’s the perfect opportunity for HP to capture market share by focusing on new products and their customers. I’m just not sure it needed to announce it with a statement; just do it.
If I were a shareholder of HP – one who had seen the company trip up so often – I’d want them to keep their focus on the business, and not on crafting some silly statement. This seems more fitting for a playground spat, not a major corporation. But then again, reviewing the corporate history of HP during the past decade, this is par for its course.
Now we’ll see if the jab can be reinforced with a blow to Dell’s market share or if it’s just empty words.
by Adam Levy
The other night I sat down to read and watch the news – and the big story of the day was Lance Armstrong’s doping admission. First up for me was a venerable New York-based financial-centric newspaper who basically said they knew it all along, after all they had reported first in an “exclusive” that Lance’s teammate Floyd Landis had using banned performance enhancers, or something to that effect.
Soon, the story bored me so I switched on the TV news. First up was the report on a major network showing footage from its “exclusive” interview with Landis (who I could have sworn I’ve seen in another exclusive on another network). In the course of the next 30 minutes, I read and watched two more exclusive reports. Wow.
This seemed to be two things. First, it was a frenzied reaction to Oprah’s “exclusive” interview with Lance. These news outlets had to tout their own accomplishments to keep up with Oprah. Second, it seemed like the ongoing abuse of the word “exclusive”.
If a CEO sits down with a news organization – and no other news organizations – we have an exclusive. Big deal. It only matters if the CEO breaks some news or provides insight into the company that was never before known. If the CEO marches from studio to studio, from news desk to news desk, there’s actually a string of “exclusives.”
But again, does it matter? I remember an instance at a former place of employment where a reporter was lauded in breaking a news story, for getting information –exclusively – before the pack. What really happened was the reporter attended a press conference and called in a headline before anyone else. Great! Good work!
The only problem was that the press conference was televised. So did the reporter really have an exclusive? I don’t think so.
I hate the word and the way it’s thrown around so cavalierly by news organizations. Plus, I don’t think the reader/viewer cares very much.
Most of the other times that news organizations use the word, I think they do so to make themselves feel important. I don’t think the reader cares.
So kudos to Oprah for getting the interview with Lance and congrats to all the networks and newspapers that did their jobs in previous years. But let’s leave the word “exclusive” to the Woodwards and Bernsteins of the world.
Now, they had an exclusive.
by Adam Levy
Last Wednesday, on a flight to Washington DC, I read an article in both the Wall Street Journal and New York Times about the horrific fire in Bangladesh two weeks ago in which 112 people died in a factory producing clothes for Wal-Mart.
Both articles were respectful of the tragedy and the magnitude of the disaster. That’s where the similarities end — and left me thinking one publication dropped the ball on reporting this crucially important story.
I read the Journal first and my takeaway was that poor ol’ Wal-Mart is almost an innocent bystander in this tragedy. The article seemed to point fingers at the retailer’s supplier, which, reportedly, skirted the rules for informing Wal-Mart that it was subcontracting some of its work.
Here’s what the Journal wrote:
Wal-Mart, for instance, says that it is the suppliers’ responsibility to use factories approved by the company, and it warns in an extensive manual that suppliers can be banned from doing business with it if they fail to get that approval.
Simco (the supplier) was familiar with those rules, because it has been making clothes for Wal-Mart for more than a decade and sells 70% of its production to the company, the senior Simco executive said. Yet he said Simco sent the girls’ shorts order to Tuba Group without Wal-Mart’s prior approval.
Many of the Journal’s assertions were sourced to documents on various companies’ websites. The story wrapped up with an old comment by a Wal-Mart executive saying it isn’t financially feasible to help improve fire safety in Bangladeshi factories. A Wal-Mart spokesman said that comment was taken out of context.
The Times’ coverage was markedly different. It was direct and damning. “Documents Indicate Walmart Blocked Safety Push in Bangladesh” was the headline. It cited documents showing that a Walmart official in 2011 played the lead role in blocking an effort to have global retailers pay more for apparel to help Bangladesh factories improve their electrical and fire safety.
And it left me convinced that Wal-Mart knew that the subcontractor had been producing clothes for the company. Here’s a paragraph from the Times article:
“It was not a single rogue supplier as Walmart has claimed — there were several different U.S. suppliers working for Walmart in that factory,” Mr. Nova said. “It stretches credulity to think that Walmart, famous for its tight control over its global supply chain, didn’t know about this.”
I don’t know if the Times nailed this story and the WSJ was too soft. But that’s the impression I got from reading both. And this is no ordinary story. This is important and newspapers of record and influence HAVE to get this right. Why? Because getting this story right can raise pressure on Wal-Mart and other global retailers to help fund fire safety measures throughout the world, and, hopefully, avert a tragedy like this from ever happening again.
by Adam Levy
There are numerous public relations lessons that corporate America can glean from the presidential campaign.
There was the role of social media. Don’t alienate a core constituency (or customer base). It’s not all about advertising spending. The list is long.
I want to focus on what I think are the three most important lessons that corporate executives and PR professionals can derive from the campaign. They might seem simple, but the consequences of not adhering to them can be costly.
First, always be prepared. I’m not sure if the president’s performance in the first debate shifted the narrative and momentum toward the challenger — but his less-than-stellar showing clearly didn’t help him out. Was he not prepared? Maybe. Regardless, the lesson is stark: the c-suite needs to be prepared in every public situation — in front of analysts, customers, and the media, televised or print.
In this day and age Jon Stewart, YouTube or any number of bloggers can elevate even a slight flub to epic proportions. If you’re caught flat-footed, expect it to go viral and deal with the consequences.
Second, be consistent. Flip-flopping runs rampant in political campaigns. Companies need to recognize that they’ll be around longer than a campaign cycle and need to focus on consistency. Key messages are a company’s brand. If you make widgets, you need to reinforce why your widgets are better on a consistent basis. Stress the proof points over and over again. If you sell a service, articulate why your service is superior.
Persistence, sticking to messages, and ensuring consistency is the way to reach your base and build and solidify your brand.
Third, be clear. Not to take sides, but I’ll point out Mitt Romney’s use of “binders full of women” comment during the second debate. That phrase was confusing, became the focus of attention and alienated some voters. The lesson for corporate executives: speak clearly. Choose your words carefully. Don’t speak in jargon – don’t use words that have no meaning.
We like to say at 30 Point that words such as leverage, catalyze, and silo all refer to something else and were interesting when applied to new situations.
Now, they are words used by people who wouldn’t be able to use a lever, fix a catalytic converter, or know how to load grain into a silo.
by Adam Levy
A growing trend in journalism revolves around branded or sponsored content — individuals or companies pay to place their editorial creations alongside the “real” journalism.
It’s not new; advertorials have been around for a while.
But more and more websites are allowing it — even some run by major news organizations — and the line is blurring. It’s not always clear what’s “real” and what’s someone with an agenda is placing.
On the surface, I don’t mind it. Yes, I know, it runs smack into the basic tenet of journalistic independence and all that. But, if it’s clearly labeled as a story told by a company and paid for by them than I don’t see the issue.
Last year, When Nissan CEO Carlos Ghosn toured the carmaker’s earthquake-damaged plant in Japan a camera crew followed him around. That crew was in-house employees of Nissan’s newsroom. The content was posted on the company’s website and shown on YouTube. It was well done. I watched it.
Why not take the initiative and create your own story – about a product, about an issue (climate change, obesity), whatever the case be? In the days of shrinking news holes, I don’t mind companies standing up and going outside the traditional journalism box to tell their story.
I currently have a publicly traded client who is not getting a fair shake in the local media in which they operate. A litigator clearly has the reporter wrapped around his finger; the newspaper’s editor is not interested in hearing the other side of the story. In these cases, I believe a company should create its own medium. I don’t mind recommending a pay-for-play situation.
What I do mind is when the line is blurred and when I can’t tell when the content is company produced. I don’t want to name any names here, but on some sites (yes, major big journalistic enterprise ones), it’s hard to tell the difference.
That’s disingenuous. Clearly state who is writing this and who the author is working for and then – if the story is well presented – you’ll have an audience of at least one.
by Adam Levy
Jack Welch, the storied former CEO of General Electric, went out on a limb last week and insinuated that the Obama Administration somehow manipulated the U.S. employment data for his political benefit.
He wrote a tweet to that effect and then on Wednesday wrote an op-ed in the Wall Street Journal, defending the “stink” he made and refusing to “pipe down.”
“I Was Right About that Strange Jobs Report,” Welch wrote.
Throw me in the camp of those who would like him to pipe down — or maybe come clean with how he knows. Maybe Neutron Jack knows what he’s talking about, but he’s not telling us.
Just about the same time that Welch was doubting the authenticity of the Department of Labor report, I read a couple of articles that a team of academics were questioning the veracity of U.S. corporate earnings reports. The study found that one of five U.S. companies – yep, 20 percent of U.S. firms – cook the books when they release their earnings.
Finance professors at Duke University and Emory University found that a not insignificant number of companies “manage” earnings and use aggressive accounting maneuvers to tweak the numbers — legally, of course! These companies can tap into reserves, or deploy some other sleight of hand to make sure the numbers hit or exceed targets, enabling, of course, the CEO to get his or her bonus, the stock to stay up, and so forth.
Is it too much of a leap to think that maybe somewhere in his corporate background Welch encountered such a phenomenon, and that’s influencing his certainty about the government fiddling with its report?
I’m not suggesting that Welch and/or GE cooked its books (never!). But it seems like there is a one-in-five shot that a company does that – so maybe Welch has some personal experience.
I realize it’s bad form to take a cheap shot and insinuate some malfeasance regarding a CEO considered a legend by many. But why should I pipe down? Welch won’t.
by Adam Levy
There are many reasons that I really, really want to like Quartz, Atlantic Media’s new business website.
First of all, I like the magazine — which is usually very well written and full of unexpected and provocative points of view. Second, of all, well, it’s business news and in a world full of journalistic shrinkage, I welcome the commitment to more financial journalism.
Third, there are some stellar journalists behind this effort — people who have done great work over the years — and I’d love to encourage them.
But, after a week of popping around the site, I’m not ready to commit to bookmarking this site. It boils down to the same reason I don’t subscribe to the Atlantic magazine, despite enjoying the read when I pick it up at a newsstand every now and then: there is some great writing and cool graphics, but it ultimately failed to convince me that it’s a must read.
I had trouble figuring out what it was I had to read. I’m old school, for sure, and rely on the news judgment of new organizations to help me with my time management. Bloomberg’s top stories and the WSJ’s layout are intuitive, easy to follow.
At Quartz, it’s not so clear. The “defining obsessions” across the toolbar isn’t really what I’m obsessed about. I clicked on one and up popped Bloomberg News article I had already read. I clicked on another and got a neat enough graphic showing three other magazine covers progressively ragging on China.
What clinched it for me was on Sunday when I clicked on “The Next Crisis” and got a two-day-old story from Bloomberg on BofA paying $2.43 billion to settle with investors over its buyout of Merrill Lynch. Huh? Isn’t that the LAST crisis? What’s new about it? No added commentary, no perspective – just a stale two-day-old story that made me wonder if someone stuffed it under the heading by accident.
The same day I clicked on “Lifestyle” and got a list of trivia about “The Princess Bride.”Now, I love that movie, but come on, this and the BofA story don’t scream “you have to bookmark” me. Plus, can’t I get that trivia from imdb.com, and not from a business-centric web site?
For the time being, I’ll leave my biz-news bookmark alone and have Bloomberg, FT, WSJ.com, Reuters and AP in there.
I know better than to rely on first impressions, so I’ll give Quartz another shot. But for now and for me, it just doesn’t belong on the same stage as the others.
by Adam Levy
I’ve been reading a lot about college education these days—in part, because newspaper financial sections seem full of articles on the topic. In addition, I recently became an official college tuition payer and will drop my freshman off at college next week.
What am I reading? Well, there’s a healthy debate about whether college education is worth the high cost. The New York Times coverage has been sobering and slanting it seems to the sobering mountain of debt that is crushing so many students and recent graduates.
I also recently read in the Wall Street Journal about clever ways I should (and should have) futzed with my income to heighten my chance of getting financial aid. I better read that stuff more closely, as in addition to a rising college freshman I also have a high school senior targeting some pricey schools.
The article I want to read: “Do colleges collude on price?” I was talking with a smart client (who has a high school junior) and he raised the point that they must. After all, can it really cost almost exactly the same to educate a young man or woman in New York City, Philadelphia, Palo Alto, or Georgetown as it does to educate a student in Lewiston, Maine, Gambier, Ohio, and Annandale-on-Hudson, New York.
I don’t want to name my client here, but here’s his take: “If this was a business – any business – there’d be inquiries into price collusion. My guess is no one wants to take this on because that might kill the chance for some Justice Department attorney to get his son into Brown.”
Well, I’m not so sure about that.
But it is interesting to look at the costs. If you Google “most expensive colleges in USA” you’ll find lots of lists. Private colleges tuition plus room and board is now at or above $55,000 for the top 20 most expensive schools (Sara Lawrence seems to top many lists, hovering at $60,000). Of course, the school that just deposited my first tuition payment billed me for $60,000 and it doesn’t rank in the top 20 of most of these lists – so I wonder about the accuracy of these lists).
What is revealing is that there’s a relatively narrow range for the top 50 most expensive universities – maybe a difference of a few thousand dollars between the top and bottom of the list. And these schools are a mix of rural schools with small faculties and facilities and large universities with a range of amenities that make me wish I was in my son’s shoes.
I see a lot of stories in the business press about price collusion. The DOJ is suing Apple for colluding to fix e-book prices. And, a quick internet search reveals an article in The Independent from last year that shows the European Commission slapping fines totaling a steep $315.2 million euros on Unilever and Procter & Gamble for fixing washing machine detergent. While washing machine detergent is indeed important, so is a college education.
I’d like to read an intrepid reporter tackle the collusion angle on something that is saddling our youth with tens if not hundreds of thousands of dollars in debt and costs a whole lot more than a bottle of Tide.