Dark Side of the Moon
(originally published by Booz & Company)Dear Monte:
It’s 3:30 in the morning, and once again, you can’t sleep. So you roll out of bed and boot up the computer. You check the Hang Seng. You look at the Nikkei. You call up the closing price of AmSmelt on the Nasdaq. And then you blink. That number can’t be right. The stock couldn’t possibly be off another 10 percent in after-hours trading.
But yes, it is.
With a shrug and a shake of your head, you scan your inbox, glancing at the message from the first Mrs. Stellar (she’s lost her job); the plea from your eldest daughter (her chain of pet grooming salons has been put to sleep); the inquiry from your elder son (he, 31, formerly of the film business, more recently in the $46-for-a-plate-of-pasta restaurant trade, is now looking to move home again); and then — finally — you click on the missive from the AmSmelt CFO, containing the first draft of the company’s quarterly financial statement.
You know how to read a spreadsheet. You understand assets and liabilities, income and cash flow, sales and receivables, debt and amortization, profits and loss. But as you study the document — filled with asterisks and footnotes in an attempt to satisfy Sarbanes-Oxley regulations and the Financial Accounting Standards Board’s definition of transparency — you’re suddenly reminded of what T.J. Rodgers, CEO of Cypress Semiconductor, recently blogged about his own tortured financial statements: “They’re a mystery to me.”
And so you sit there, wondering: We held a positive cash position just last week. We’ve closed plants, reduced overhead, cut prices, and renegotiated with banks and suppliers. Could AmSmelt go bankrupt? Are we going to need a bailout?
On the one hand, bankruptcy — or a restructuring after a bailout — might be a way of deposing the founder’s twin 66-year-old sons, AmSmelt Directors Otto and Carl, who’ve continued to pour acid in everyone’s ears, saying it’s time for a management change. On the other hand, you may find yourself out of a job, too.
The next morning, you arrive at your office, bleary-eyed. You check the stock price. It’s up 3 percent. You call the CFO, who agrees that the quarterly statement is indecipherable. But he assures you that AmSmelt actually does have a strong cash position and room to breathe. And you both wonder if maybe it’s time to go shopping and pick up some of the smaller smelting companies that can’t get any banks to return their calls.
But then you’re suddenly reminded of Citibank — one week making a run at Wells Fargo, and the next begging the government for cash. And that’s when you call me, and recount the entire story, asking for some PR advice.
So here it is — although it goes beyond the purview of pure PR: Sometimes, Monte, the best action is no action at all. You’re the CEO. Have faith. You’ve set the course. Sometimes, you just have to lash yourself to the mast and weather the storm.
I’ll be in touch —
The Biffster
PS: Although I can’t offer anything but solace on your ex-wife and your adult children, my guys in the aviation world tell me that Otto and Carl have been kicking the tires on some of the corporate jets that have recently been put up for sale at distressed prices. My suggestion? Bat this down emphatically at the next public shareholders’ meeting. If you’d like, I’ll arrange for a “disgruntled” shareholder to ask the question. Yr thoughts, pls.
