Kupinski: "Of the roughly $7 million in severance expenses, I would imagine that most of that was at USA Today, right?"
Martore: "Certainly, the lion's share of that would be associated with some of the work that is being done at USA Today."
Kupinski: "Are you contemplating any other significant severance costs in the fourth quarter?"
Martore: "Not at the present time."
Not at the present time. That's a good illustration of the wiggle room all companies leave when asked about future plans. For example, when layoffs are under consideration, but not yet finalized, it's best not to completely close off the possibility, or Wall Street will question your truthfulness during the next go-around.
(Note: I'm certain Kupinski was asking about severance costs across GCI during the fourth quarter, not just at USAT.)
Context, please
To put the third quarter's $7 million into context, here's how much GCI spent on severance annually in each of the following years, regulatory documents show:
- 2007: $29 million
- 2008: $119 million
- 2009: $65 million
Related: GCI's total employment, year by year
What is the reason for the lie? Gracia can maintain she was economical with the truth or otherwise weasel out of any problems, as you point out. But what does she get for misleading stock analysts?
ReplyDeleteAnalysts are like reporters and if you lie to them, they won't trust you about anything the next time and won't use your quotes in stories. It just pisses off analysts and makes for angry reports, which sway stocks.
Besides, I would guess that any astute analyst following GCI will be reading this blog, and know they are studying another round of layoffs.
I just don't see why Gracia doesn't fess up
and tell the truth at these conferences, because she knows she is going to be found out.
It's not out-and-out lying. You put it best when you called it being "economical with the truth."
ReplyDeleteBefore blogs, a chief finance officer might be more candid during conference calls. After all, traditional beat reporters listen to calls mostly when they involve big, high-profile companies -- like Apple or Goldman Sachs.
That's less common when they're mature, less well-known businesses, like Gannett. For those, beat reporters can write a brief off the earnings statement. Even now, they rarely follow up by reading the more detailed quarterly 10-Q.
But now bloggers like me focus on any scrap of information, sifting through conference call transcripts, SEC documents, and other sources of information. A smart finance chief -- and Martore is certainly one -- knows that to say layoffs are being studied, is the same as announcing it to the company's workforce.
The layoffs are going to haunt GCI for a long time and in more ways than one. Gannett went too far. Maybe some money will eventually be saved after all the severance is paid out, but then come the lawsuits, the talent flight, the deterioration of various products, the loss of production from lack of resources and bad moral. The list goes on and on.
ReplyDeleteSome layoffs were probably necessary for short-term gains, but not thousands. Like many businesses, Gannett overreacted. Together, this overreaction by corporate America is why the country hasn't recovered from the recession. It's why people aren't buying stuff -- no jobs, no money to buy stuff, no corporate growth.
Many businesses simply panicked or took advantage of the recession to get rid of more people than they really needed to because they were too old or to this or too that. Maybe they didn't kiss their supervisor's ass enough. Now everyone, including these businesses, are paying the price.
What you write about the impact of bloggers on the investment community is very true. Stock analysts gave up on GCI a long time ago, and the major players no longer bother with studying the newspaper industry. My stockbroker won't let me go near any newspaper stock. Dead industry, she says.
ReplyDeleteYet I was (pleasantly) surprised by the turnout of the Q3 conference. I know none of them, but I see the houses they represented. The cynic in me says they were using interns, but the questions were on target and good.
I am hearing that Christmas ad contracts are coming in lower than expectations. Is this true?
ReplyDeleteThe day after the conference call, we saw top editors at our paper meeting hastily, looking very grim and unhappy during the meeting and then not meeting people's eyes when they came out. Unfortunately, we know these signs all too well: Layoffs are coming in the next couple of months.
ReplyDelete"Not at the present time" means "Not today, but we're not ruling out tomorrow."
ReplyDeleteyou know what's so sad about people like Martore calling the shots? She has no inkling what its like to be a journalist. none. it would be one thing if Gannett was a widgit maker. But there is much context and nuance and undefinable skill that goes into putting out the news. She'll never get it. a true bean counter.
ReplyDeleteYou know, 12:46, "bean counters" help keep people accountable. I can't tell you how many sales people I have encountered who feel that once they have booked the ad order, their job is done. They feel no responsiblity about whether the ad gets paid for.
ReplyDeleteIt was "bean counters" who noticed the thousands and tens of thousands of dollars being written off due to unpaid transient ads. Now prepayment is required for all transient ads (I think this is now widespread throughout Gannett) and if sales revenue figures are down a little, at least all the advertising was actually paid for.
Yes, a paper needs more than "bean counters" and there are a lot of soulless ones, but do us all a favor and look at the big picture. It's the "bean counters" who are making sure there is cash in the bank to fund the paychecks for everyone. Without them, the layoffs would probably be worse.
This is not a comment, however, on compensation levels, which is an entirely different topic.
you think editorial is that much better? most of the senior editors and newly hired vice presidents who will big foot the departments wouldn't know a story if it hit them in the face.
ReplyDeleteRemember folks....a bean counter cares about one thing and one thing only - THE BEANS. Everything else is just an annoyance.
ReplyDelete9:42,
ReplyDeleteYes, bean counters keep people "accountable." They also spend their days in the figurative darkness scheming new ways to squeeze the last corporate dollar out. And if that means screwing you and me - they'll do it. Transitionsal pay is just the latest example from this sad lot of sub-humans.
i guess the beancounters are the ones who figured they can furlough employees, but find enough cash to pay handsome bonuses to senior executives thoughout the company. I suppose the bean counters are the ones who managed to hand out raises to 100 usat employees this year when the rest of us have not had a raise in years. i suppose the beancounters are the ones who are eliminated secretarial staffers and content producers while keeping virtually every high paid editor on USAT's payroll, despite THEIR jobs being eliminated. And I suppose its the beancounters who manage to direct Foundation money to charitable and non profit organizations - like Martore's designation of $5,000 in foundation money to an elite private school in one of the highest income areas in the country. I guess beancounting means you can borrow the corporate jet on private business. Beancounting! Not for the entitled ones!
ReplyDeleteI now believe that the key distinction here is whether any severance costs will be "significant."
ReplyDelete