The profit warning problem

Tomorrow's Business

“The AA is a phenomenal business,” is how chief executive Simon Breakwell opened his statement to the stock market today.

By the time readers got to the profit warning three pages in, the City had already decided the business was 30% less phenomenal. The shares crashed.

In hack circles, not putting the news at the top – the profit warning – is seen as both a sin and a joke.

I’ve got some sympathy with both an incoming CEO like Breakwell and Finsbury, the PR agency.

They might have reasoned that since the shares are going to get a kicking anyway, it’s better to lead on something positive. Good for morale.

Maybe the trouble with these announcements is that they have to cater to too many audiences – hacks, the City and employees.

The chief executive doesn’t want to broadcast to his staff that the company is in trouble. The flaks don’t want to look like they are burying bad news.

I think the best, inelegant solution, is to start with the upbeat message, but go quickly into the profit downgrade.

I’m afraid the AA was rather too positive today and in the long run, that doesn’t do it any favours with any audience. The problem of serving too many masters.



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