The Numbers Tell the Story

by Christopher M. Wright

Mr. Wright is a D.C. ASBPE Board Member and freelance writer
specializing in business and technology topics for national
and international clients. []

Using Excel to calculate corporate financial ratios was the
focus of ASBPE's first-ever teleseminar on December 14,
2006, jointly sponsored by ASBPE's New York and Washington,
D.C. chapters. The presenter was Steve Ross, author of 19
books and a former associate professor at the Columbia
University Graduate School of Journalism. Ross currently
edits Broadband Properties ( and teaches
business writing at the Harvard Extension.

Two additional sessions on how to analyze company financial
statements are planned for January and February 2007 (dates
TBA). Plans call for a DVD of the sessions to be sold
through the ASBPE website.

During the first session, Ross walked the participants
through a pre-populated Excel spreadsheet containing 1987
profit and sales figures for 15 large US companies.
Participants, who received the spreadsheet and explanatory
material in advance, calculated key business indicators,
with Ross providing step-by-step instructions how to enter
formulas and display results. At the end, participants had a
ready-made spreadsheet for use in assessing companies they

The key business indicators included profit margin, earnings
per share, price-earnings ratio, and return on investment
(ROI). "Sales is a bit of a slippery number," Ross said.
"Profits is also a slippery number." Sales includes more
than product revenue. "It's also the profits and losses
[IBM] made on currency fluctuations and buying and selling
assets," he said.

As for profits, "are they the same numbers that are reported
to the tax people? No, they are not. Can you see what they
report to the Internal Revenue Service? No, you can't," Ross
said. Profits divided by sales gives you the company's
profit margin, he explained.

Ross then moved into calculating the total worth of a
company's stock, which he termed 'market value'. "Here is
where the misreporting happens," Ross said. Just because
IBM's stock was worth $68 billion (in 1987) doesn't mean
that somebody could buy the entire company for that amount.
"That's impossible because, what would happen as soon as
they started buying shares?," Ross asked. "The share price
would go up, the market value would increase."

After calculating earnings per share (EPS), Ross discussed
the price-earnings (PE) ratio, which is the price of one
share of a company's stock divided by the company's earnings
per share. The PE ratio is "perhaps, next to profits and
profit margin, really the most important key to finding a
story," Ross said. "The higher the price-earnings ratio, the
higher the expectations of the stock that it's going to do
well in the future and expectations are always a story. Find
out why such expectations are happening - is it hype or is
it real?"

He then contrasted General Electric with a PE of 18.8 (in
1987) with Ford at 4.8. The market was predicting a better
future for GE than Ford and was right in that case, but is
not always infallible. The old AT&T had an average PE in
1987, signaling average investor expectations, but the
company steadily declined until its progeny SBC
Communications moved to take it over in 2005.

There is no PE if the company is losing money, Ross said. In
that case, the PE is generally shown as 'n/a' or 'n/c' (not
applicable or not calculable). "You're not supposed to be
able to calculate a price-earnings ratio when there are no
earnings," Ross said. That sometimes happens when the
company "takes a haircut," i.e., when the company knows it
will lose money in a particular quarter, it will sometimes
pack all the bad news and possible writedowns from
money-losing activities into one quarter since the stock
price is going to take a hit anyway. Investors recognize
this is being done and mute their reaction accordingly. The
point for journalists, Ross said, is not to write wild
stories (about Ford, for example) about how the company is
close to bankruptcy when noncash writedowns don't threaten
the company's viability as a going concern.

Return on investment is another key profitability indicator,
the inverse of the PE ratio. "It's what you earn divided by
the price," Ross said. This earnings yield is not the same
as cash dividends or dividend yield, he noted. "Remember,
most of the money [the company] is using to reinvest and
grow the company. Only a little bit comes back in your
dividend," he said.

Ross next showed how Excel can calculate the average profit
margin for an entire group of companies. If a company's
margin is below the average, journalists can look for
explanations as to why the company compares unfavorably to
others - tougher competition? government regulation?
supply-demand imbalance affecting the price for the
company's products? Oil companies tend to be doing better
today than they were in 1987, Ross said, because oil
supplies are tighter now relative to demand than they were
at that time. "The demand is far higher," he said.

Ross wound up the presentation by showing how journalists
can sort the information in the spreadsheet (from highest to
lowest PE, for example) and generate corresponding charts
that can be exported to photo editing software or web pages.

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I Hate You, Don't Leave Me: Do's and Don'ts in the Editorial/PR Relationship

by Christopher M. Wright
Mr. Wright is a D.C. ASBPE Board Member and freelance writer specializing in business and technology topics for national and international clients.

The 'love-hate' relationship between trade pub editors and public relations professionals was the subject of a panel presentation jointly sponsored by ASBPE's D.C. chapter and the Public Relations Society held November 1st in Washington, D.C.

Panel moderator Robert Freedman, senior editor at Realtor Magazine (National Association of Realtors) and former ASBPE national president, captured the ambivalence by observing "when the relationship works, it works very well. The negative side can impede on the editor's productivity."

Freedman's team gets inundated with press releases, but finds only two out of a thousand received every week in any way useful. The ones selected are not printed verbatim but form the basis for stories meeting previously established editorial needs. In what he termed an increasing problem, he now gets several calls a day from PR reps who keep hounding him despite assurances he will be back in touch if he needs anything else.

The key to getting exposure, Freedman said, is to be helpful. He cited the example of a real estate company in Seattle that often makes the magazine's 'most influential' list because its PR rep is so effective - requests for certain types of sources to interview are filled with multiple names within a day. The sources have been briefed and are ready for his call. Story ideas are pitched only very selectively. "Because they're so helpful to us, they end up getting a lot of ink in the magazine," Freedman said.

Lisa Throckmorton, senior vice president of the hi-tech PR firm SheaHedges Group in McLean, Virginia, said the onus is on PR reps to truly understand the target publication - How often is the magazine published? What is the audience? Is it an association magazine or independent? How thin is the editorial team spread? Does the magazine contain mostly news items or feature articles?

Beyond the basics, figure out what the editor needs and can use. Only then can you effectively pitch content. Maybe that big industry merger is totally irrelevant to your target. 'Technology' might be on the editorial calendar, but it's PR's job to be smart about what type of story and what level of detail the editor wants. Is it laying out the entire return on investment case for a new application or just 'ten tips' for deciding on a software package? When you pitch a story, provide sources beyond the company you represent - industry analysts, competitors, thought leaders, etc.

All of this should be in the context of a continuing relationship, not a quick hit. "Building that relationship should be at the core of any trade press, media relations effort," Throckmorton said. One way to do that is to share analyst findings and industry reports with the editor with no expectation a story will result.
Think beyond the news release, she said. A lot of her targeted publications benefit more from contributed articles from industry experts, so she spends a lot of her time developing article abstracts. Moreover, the landscape is changing because of blogs and wiki's. "For a lot of trade press, the news release is somewhat obsolete," she said.

Gina Veazey, former editor at the National Association of Convenience Stores and now director of communications for the American Industrial Hygiene Association, picked up on the point about understanding the publication: "We might write an article about M&A activity, but we're never going to write about the fact that [a particular store] is for sale on Paradise Road in Las Vegas." You need to have realistic expectations about what press releases will fly, Veazey said. Putting out a new brochure, updating a website, hiring an intern - these things are not news.

How to improve your odds - Veazey appreciates pitches to topics already on her editorial calendar. "It makes my life easier," she said. Be proactive; ask when the next editorial calendar will be constructed and be ready with calendar suggestions.

Take the time to educate new editors about the industry for the sake of relationship-building. "Become a valued resource," Veazey said. "Provide reliable, thoughtful insight." Create news - studies and white papers generate stories. Be sensitive about the publication's competitive position and be honest if a pitch is not exclusive.

Here's what not to do - Don't call up and complain because your client wasn't included in a story. It's not an editor's job to survey the entire industry, she said. Above all, don't try to exert influence by virtue of the fact that your client is an advertiser in the magazine or buys a booth at the trade show every year. "That's a death sentence in my estimation," Veazey said.
Shane Boyd, vice president of corporate communications for Travelers Insurance, also stressed the importance of an ongoing dialogue and finding out what the editor needs. The relationship is already in trouble if the first time you meet is to pitch a story, he said.

One way to develop meaningful content is to make executives and other experts available for background briefings. Be sure to select the right source, he said giving the example of how a claims adjuster would have been a better pick for a compelling story after Hurricane Katrina than the company CFO.

Don't be afraid to say no, Boyd said. If your client is not the best source for a story, say so. This will be good for the long term relationship. Grow the relationship and the articles will come, he said.

In the Q&A that followed, Throckmorton picked up on the point of providing experts. She set up a tour at one of her client companies, arranging for a senior technology person to walk the editors through the company's operations. Six stories resulted from that tour when her only expectation had been relationship-building.

Regarding new media, some editors are getting into podcasts and video streaming, so you should find out whether your target publications would appreciate audio or video press releases. If the magazine's website runs a blog, read it and pitch accordingly.

Other tips -
* show interest; read the magazine
* regularly read the writers who are the most important to you
* ask 'what are you working on, how can I help you?'
* remember the Golden Rule
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