Bad Management Danger Signs

Another company where resistance to putting shareholders first has led to big problems was Dow Jones, now part of News Corp(NWS Quote).

DJ's stock had been fairly high when the paper was full of tech-bubble-supported ads, but had declined to the mid-$30s prior to the ultimately successful $60-a-share News Corp. bid in May last year.

Again, entrenched management seemed to care little for shareholders, and the controlling shareholders -- the Bancroft family -- lacked the energy or the motivation to make changes. Management seemed to insist on inefficient practices like mass duplication of effort across its product line (The Wall Street Journal and Dow Jones Newswires, for instance, producing similar content with little coordination).

And then there was the company's acquisition of Telerate, a service similar to that of Bloomberg, at a time when Dow Jones had all the advantages to dominate the space.

Of course, Bloomberg won that race handily in the end.

Now that the organization has a new parent, Dow Jones seems to want to move on.

"Irrespective of what transpired in the past, the priority at Dow Jones now is to grow the business and return value to News Corporation and its shareholders," a company spokesman says.

Dow Jones shareholders did end up being lucky - instead of languishing with a depressed stock price for years, they could sell to News Corp. at an extremely rare premium to the pre-bid stock price.

Most investors don't get that luxury with their lagging stocks.