The Business Press Maven caught some reporters committing some good basic journalism on General Motors' ( GM) layoffs this week. Instead of setting up investors to be blindsided by future write-offs, the media showed some of their finer instincts, setting the table for investors with enough information to make some well-reasoned guesses about what may be coming. For this I want to say, what took you so long? We'll get to the answer. But first, a quiz: Name the one-two punch of poor coverage that might lead to more standing eight-counts for investors than anything else. Give up? Here it is: say, Company A, or, uh, Company GM, announces layoffs. The way it usually works is that on the announcement, the media simply report the number of workers to be kneecapped. The market, no moral steward, reacts with glad tidings to the sad news, and two things are reported: How many people the company plans to lay off and how the stock price popped as a result. The headline, in this endless cycle of affirmation we see so often, then becomes "Market Hot for Cold-Blooded Job Cuts," as if all the people the company cited for an axing had already gone home to clip coupons until they are lucky enough to be carted off to assisted living. It's the singular view of that form of coverage: the number of job cuts announced equated to the number of job cuts achieved. To which the Business Press Maven says: These reporters must be taking their minimum daily requirement of dopey pills. Bad, stenographers, bad! The reality, of course, is that what the company is almost always announcing are planned job cuts, so don't break your ankle tripping over your own foot to buy the stock. As for those responsible for reporting the news -- news not set in stone -- reporters have to realize that these announced numbers are usually a whole lot different from jobs already cut. Cutting jobs often involves buyout packages that may be accepted at hoped-for levels ... and may not. Cost savings might materialize ... or they might not.
How many times have trusting investors turned damp and disheveled by the follow-up announcement, a quarter or two down the line, that Company A had to take an additional writedown for costs associated with previously announced layoffs? In other words, they had to pay guys more than they ever imagined for the privilege of going home to spend time with the wife and kids. Fortunately, the media are catching on to this -- and this was reflected in the GM coverage. From the wire services on up, news outlets were mentioning the proposed terms of the layoffs way up high, often in the second paragraph, with the story going on to discuss what sorts of workers might bite and which might not. Will they retire? You decide. Why the shift in coverage? Part of the reason was that GM had prenegotiated some of the terms with the UAW and was very open about them. But more importantly, reporters have come by their awareness of the do-si-do around buyouts honestly. From newspapers to the networks, you are not a big media company these days unless you are managing your own erosion. And that means buyouts have been offered in newsrooms all around the nation at certain levels, with some accepted ... and some not. Nothing like experience to advance understanding.
Headline EnvyOn a different subject, since Bill Gates is worth about $50 billion, which makes him more than twice as rich as the Business Press Maven, envy sometimes seeps into my opinion of him, and I'm always hesitant to defend him. But when I saw a CNBC "News Alert" followed by some of the most unwatchable free association in public it has ever been my misery to see, I had to say something.
I call it spontaneous damnation. News comes, and the anchors spout whatever comes to mind first, filed in the folder "Preconceived Notions on Windows." Well, the Windows news (sorry ahead of time for the groaner) broke, and Lawrence Kudlow, in perpetual-motion mode, turned it over to "ace reporter" Jim Goldman so he could weigh in on this "potential Microsoft debacle." That's when we heard about how this is not just a Microsoft ( MSFT) problem but one that could have a ripple effect on the whole industry. There is nothing quite as unseemly as excitable boys in front of a television camera. Suffice it to say, Larry and Jim, your weedy reasoning might be right. But since you are speaking off the cuff, do you ever think of toning it down a bit? I don't mean become touchy-feely. But maybe ask Apple ( AAPL) about what kind of ripple effect this might have on the industry. Or bring up the scythe-sharp point that, provided the problems are more bugs than bears, will it really have a long-term impact? What with the delay around holiday time and Microsoft on a June fiscal year? That is half a year to recover, and do people really buy Windows for the wives for Christmas, anyhow? And if Microsoft is, as they say, accelerating the pace of other endeavors, is it really all doom? Nah, let's not get into any of that. It would take some thought and a measured tone, and the camera is running. So, too, by the way, is the Business Maven. But not before a quick tweak of a Reuters headline. Headlines are supposed to intrigue and, hopefully, impart some information that, even taken alone, can advance an investor's understanding. So how does this clunker from Wednesday measure up: " Wal-Mart ( WMT) says U.S. plans focused around customers." Reminds me of my favorite fluffy local newspaper headline ever: "Local chiropractor likes to fix backs."