|
With the stock market soaring higher than Air Jordan, it may seem that every company is enjoying boom times. Not so. A number of prominent, publicly held Oregon businesses suffered last year or early this year. With our desks covered in recently released annual reports, we took a look at how CEOs delivered the bad news to shareholders. PacifiCorp: During the good old days of monopolies, the utility industry was about as stable as they come. But as utilities grapple with deregulation, risk and ego have become part of the equation--as evidenced by the full-page photo of CEO Fred Buckman in PacifiCorp's annual report. With a disappointing year behind him, Buckman spent most of his letter focusing on the company's future, in particular its $10 billion bid for The Energy Group, a UK utility. Devoting so much ink in an annual report to a pending transaction is unusual. For the deal then to fail, as it did, is embarrassing. Nike: Unlike Buckman's, Nike CEO Phil Knight's picture is nowhere to be found in his company's annual report. That may have something to do with all the bad publicity Nike has received in the past year. In his letter to shareholders, Knight neglects to mention the Third World labor controversy. Instead, he takes a page from former Vice President Spiro Agnew and points his finger at the big bad media: "Nike (and the entire industry) tends to be a bit misunderstood," Knight writes. "The media prefer to treat us all as the entertainment portion of the business world. So, they feel free to exaggerate, to interpret, to extrapolate. To say they are prone to hyperbole would be an understatement. To say that is how they make their living would not." Nike's only direct response to criticism of working conditions in Asian factories is to include five pages of quotes culled from Andrew Young's report on his visits to the company's Asian plants. Epitope: The Beaverton-based biotech company loses money every year. But last year it outdid itself. Epitope bought Andrew and Williamson Sales Co., a company that had fraudulently sold hepatitis-tainted strawberries to schools. That corporate blunder, one of 1997's biggest, must be what prompted CEO John Morgan's ambiguous opening line to shareholders: "1997 may well be remembered as the year we made headlines." Morgan lays out a chronological outline of the company's year. He details the series of failures matter-of-factly, but does little to address why mistakes occurred or what the company learned from them. Morgan's tone throughout is strangely distant, as if he were reporting on events in which he had no involvement. Willamette Industries: Give Bill Swindells credit. While some CEOs try to sugarcoat disappointing results, Swindells gives shareholders the bad news straight up: Swindells' brief letter to shareholders reads like a laundry list of misfortune, including a candid assessment of a big brain drain from the local forest-products company: former CEO Steve Rogel bailed out, two top executives left and another died. Swindells, who came out of retirement to reassume the CEO post, apparently knows his notoriously cyclical business well. That's why he says almost nothing about the future--there's little to do except wait out the cycle. In Focus Systems: The Wilsonville-based maker of data and video projection devices actually had a pretty good year. What's remarkable, however, is how such a supposedly cutting-edge company could miss the biggest economic change of the year. CEO John Harker's letter describes the company's stellar 1997 results but gives little attention to the Asian crash, which was already several months old when he wrote to shareholders. Harker seems miss the threat in his own words. "Over the next several years," he writes, "we plan to augment the flexible manufacturing capabilities at Wilsonville with the lower cost, high volume competencies of Pacific Rim manufacturing by moving the production of certain products offshore." Harker was looking out his rear window instead of his windshield. Asian competitors have crucified In Focus this year: First-quarter results showed a loss of $5.2 million, compared with a profit of $6 million a year earlier. |
|
