Edition, June 12, 2002, Page 1
PEOPLESOFT PICKS PNI
Omnicom's Porter Novelli
International has picked up the PeopleSoft account because
it was able to demonstrate the "strategic and tactical
PR" solutions it plans to deliver to deal with the
challenges faced by the $2.1 billion enterprise software
company, said Steve Swasey, its director-corporate PR.
Gary Conway, PeopleSoft's
corporate marketing VP, conducted the search for the Pleasanton,
Calif.-based company. He met with 10 agencies and invited
formal presentations from half of them.
Former PNI CEO David
Copithorne, and San Francisco office/GM Rhonda Shantz led
the pitch. Shantz will handle the account on a "day-to-day"
basis, said Gary Stockman, PNI's Americas/CEO. Stockman
will assist Shantz on "strategic counsel."
Swasey said while some
of the firms pitching the account came across as "big
thinkers," they didn't show how they planned to carry
out their recommendations. PNI, in his view, scored on both.
PeopleSoft had used Phase
II Strategies for PR for two years. The company split with
Phase II because is wanted a more global presence.
JUDGE DELAYS ORBIS, PRN RULING
N.Y. State Supreme Court
Judge Ira Gammerman has delayed making a ruling on the May
3 lawsuit brought by Orbis Broadcast Group against PR Newswire
and its new MultiVu subsidiary.
"After hearing about
two seconds of arguments on May 21, the judge said he needed
time to read the court papers before rendering a decision
in the case," according to Mark Kalish, an attorney
Kalish said Gammerman
gave no indication when he would make his ruling.
Sheldon is out after a three-year stint as Hill and
Knowlton/New York general manager due to a lackluster performance
by the WPP Group's one-time flagship office. Diane Perry,
who joined H&K in December from Weber Shandwick, is
replacing S<heldon on an interim basis as MaryLee Sachs,
H&K U.S. CEO, looks for a permanent replacement. Sheldon
had headed Porter Novelli's healthcare practice.
2002 Edition of O'Dwyer's Directory of PR Firms
rolls off the presses this week. Hundreds of firms have
enhanced their entries with logos and agency statements,
which also appear on odwyerpr.com.
Copies of the Directory, listing 2,900+ firms, are $175
from the O'Dwyer Co.
SITRICK RUNS ADS FOR L.A.
Roger Cardinal Mahony
of Los Angeles is featured in full-page newspapers ads,
reassuring the public that he is taking steps to prevent
future abuse by priests in his archdiocese. Crisis counselor
Sitrick & Co. handles the effort.
Written as an open letter
to residents of Los Angeles and surrounding communities,
Mahony states the Archdiocese's policies such as zero tolerance
when it comes to priests that abuse children.
The ads also inform readers
about the creation of a "Clergy Misconduct Oversight
Board" that is headed by a retired judge.
Nearly 700 reporters
have been credentialed, but promised 'limited access' at
this week's U.S. Conference of Catholic Bishops meeting
in Dallas. Clerics are to debate sex abuse policy. USCCB
staff promises to kick out journalists found wandering Fairmont
Hotel hallways, restaurants looking for interviews, according
to its media advisory.
OMNICOM DOWN 14 POINTS IN
Omnicom's stock was in a virtual free fall last week,
losing $14. It lost $2.83 on June 7 on volume of nine million
shares, or six times normal volume, to close at $72 (vs.
$93 in mid-May).
The stock had won back $4 of this as of mid-day, June
Merrill Lynch had downgraded OMC and written negatively
about the entire ad sector on May 30.
It backtracked on June 7, calling OMC an "intermediate-term
Other factors impacting OMC were reports that the Wall
Street Journal would write about certain "accounting
issues at OMC"; the sudden resignation of the head
of the audit committee, sparking rumors that financial irregularities
might be involved; complaints about insider stock selling;
ML's comment that insiders had just given themselves a "staggering"
amount of options; OMC's $2.9 billion debt, and its refusal
to identify acquisitions.
The steep decline last week on high volume indicated that
some institutions were pulling out, said Wall Streeters.
Issues Warning on Debt
Standard & Poor's on June 4 affirmed OMC's credit
rating so it can boost its commercial paper
(continued on page 7)
Edition, June 12, 2002, Page 2
F-H, B-M 'OUTED' IN TOBACCO
The tobacco industry
relied on aggressive PR "intelligence" by Fleishman-Hillard
and Burson-Marsteller in the 1990s to "spy" on
anti-tobacco groups, according to a report in the June American
Journal of Public Health funded by the California Tobacco-Related
Disease Research Program and the National Cancer Institute.
Citing public tobacco company memos released as a result
of the Minnesota Tobacco Settlement and other legal cases,
author Ruth Malone - a University of California RN and PhD
- singles out F-H and B-M for acting as "public relations
spies" on anti-tobacco groups.
The Journal says that
F-H monitored Stop Teenage Addiction to Tobacco for R.J.
Reynolds, sending regular intelligence reports to the tobacco
company which included copies of STAT's Tobacco and Youth
Reporter and information on conferences.
Martha Boudreau, GM of
F-H's Washington, D.C., office, told this NL that the firm
instituted a company-wide policy not to work for tobacco
clients about 11 years ago because that work was "inconsistent"
with its developing healthcare practice at the time.
B-M was handling intelligence
for its own client, Philip Morris, when STAT allied with
INFACT, a corporate watchdog group which was new to the
anti-tobacco fight, in 1993.
PM staffer Barry Holt
said in documents that B-M could utilize third-party contacts
with access to information on INFACT and its activities,
Malone wrote. A five-page report concluded with plans for
a third-party meeting with INFACT leadership "to assess
the level and degree of resources and commitment to the
campaign," the Journal said.
B-M referred calls to
Philip Morris. PM spokesman Brendan Morris told Reuters
it's important for PM to know what a wide range of stakeholders,
including the public health groups, are saying about the
company and its business practices. "If information
was gathered under false pretenses in any way on our behalf,
we agree that would be inappropriate," he said.
WHITE HOUSE LAUNCHES GLOBAL
The White House is launching a global communications office
headed by Tucker Eskew, media director. He will work closely
with President Bush's counselor Karen Hughes, who is returning
to her native Austin so her son can attend high school there.
Eskew has been involved with the London-based Coalition
Information Center that was formed following 9/11 to respond
to and refute misinformation put out by enemies in Bush's
"war on terror." The new office is to make sure
that the Administration speaks with one voice, which will
entail close coordination with the Justice, State and Defense
Eskew's mentor was the late Lee Atwater, who was the first
President Bush's political advisor. He will have a staff
of about a dozen people.
COKE PAYS $100M FOR 'NAMING'
Coca-Cola is paying $100 million to slap the "Minute
Maid" name on Astros Field, in Houston, a baseball
stadium that was known as Enron Field for the past three
years. The 30-year deal provides "pouring rights"
at Minute Maid Park for its orange juice unit, which owns
brands such as Hi-C (fruit drinks), Fruitopia (fruit juices),
and Odwalla (juices/ smoothies/spring water). MM is headquartered
in Houston and employs about 2,200 workers there.
Tropicana, MM's archrival, has its name on the stadium
of the Tampa Bay Devil Rays. It is a unit of PepsiCo.
MERRILL 'BULLISH' ON RUDY
Merrill Lynch is thinking about hiring former NYC Mayor
Rudy Giuliani to help salvage its reputation that has been
tarnished by a $100 million fine to settle a probe that
it was too upbeat about the prospects of stocks, and a power
struggle at the top.
The firm, according to The New York Times, is using
pollster Penn Schoen, a WPP Group unit, to determine the
public perception of Giuliani, who also was a top Justice
F-H, KETCHUM BAG DOZEN OF
Omnicom's Fleishman-Hillard and Ketchum bagged a dozen
Silver Anvils between them after being nominated in 22 categories.
Those wins continue their dominance of PRSA's awards night.
Kethum has won 51 Anvils in the last nine years, while F-H
has picked up 39.
F-H won seven 2002 Anvils on behalf of California Dept.
of Food & Agriculture (gov't/community relations); two
prizes for New Jersey Dept. of Health and Senior Services
(special events/observances and public service); SBC Communications
(special events/observances for business services); Schering-Plough
HealthCare Products (marketing consumer products/packaged
goods); New Jersey Dept. of Health and Senior Services (marketing
consumer services/healthcare), Zimmer Holdings (IR).
Ketchum, which won ten Anvils last year, claimed five
during the June 6 ceremony at the Equitable Tower in New
Winning programs were for Orbitz (mktg. consumer svcs./travel
tourism); Equifax (mktg. consumer svcs./ financial svcs.);
Kikkoman Int'l (marketing B2B); Orkin (integrated comms./consumer
services); J.R Simplot Co. (integrated comms./B2B).
Interpublic's Carmichael Lynch Spong won two Anvils for
Select Comfort and one each for General Mills, and Department
56. WPP Group's Hill and Knowlton copped three for Compaq
Computer, Motorola and Pacific Gas and Electric.
PRSA gave its 'best of" Silver Anvil Award to XM Satellite
and its consultants Andrews Communications, PainePR, PR
Consultants Group and Allyn & Co. for the national launch
of the first-ever satellite radio service, a kick-off that
had to be delayed due to the Sept. 11 terror attacks.
Edition, June 12, 2002, Page 3
PR PROS HELP
RANK TOP TECH WRITERS
annual Technology Marketing magazine's top Media
Influencers of 2002, which ranks technology media properties
and journalists, selected Stephen Wildstrom of Business
Week as the top writer in the field overall.
who is a columnist, beat Walt Mossberg of The Wall Street
Journal, who fell to No. 2 after being ranked as the
No. 1 tech journalist for the past several years. Mossberg
held his No. 1 ranking in the newspaper category.
also finished first in the ranking of tech writers who work
for business magazines.
of the 30 most influential tech journalists, are based on
a survey of PR pros and media buyers, plus the opinions
of TM editors. The rankings are published in TM's June 2002
Bob Evans, who is editor-in-chief of Information Week,
was ranked as the third top tech journalist overall and
No. 1 trade editor. Evans, who was ranked fifth last year,
replaced David Kirkpatrick, senior editor of Fortune,
who dropped to fourth place.
editor-in-chief of News.com,
jumped from 8th place to fifth place.
ranked editors included Michael Miller, editor-in-chief
of PC magazine; Maria Bartiromo, anchor for CNBC's
"Market Week," and Stephen Manes, contributing
editor for Forbes/PC magazine.
Ranked as the "Hottest Tech Media" were: (1) The
Wall Street Journal; (2) Business Week, (3) Information
Week, (4) Fortune, (5) C/net, (6) USA Today,
(7) New York Times, (8) Forbes, (9) CNBC,
and (10) Red Herring.
TEEN VOGUE TO MAKE DEBUT IN
Teen Vogue will begin publishing in 2003 with a
It will start with a circulation rate base of 450,000,
according to Steven Florio, president/CEO of Conde Nast
Publications. The magazine will publish six issues in 2003.
Amy Astley, currently beauty director of Vogue,
will be the editor-in-chief of TV. She had been editor of
the four test issues.
TV will be produced in the new Euro magazine size (6 3/4
inches by 9 inches). It will feature many of the same photographers
who shoot regularly for Vogue, but it will be tailored to
"sophisticated teen sensibilities," said Maurie
Perl, SVP/corporate communications for Conde Nast.
The articles will address the full range of teenage interests,
from celebrities, movies, music, and shopping to peer pressure,
body image and self-identity. The magazine will also feature
magazine, published by Gruner + Jahr, is searching
for a new editor-in-chief to succeed George Gendron, who
is leaving on Sept. 1.
a columnist for The Wall Street Journal, who was
artificially impregnated with sperm from an anonymous donor,
has given birth to a son, Louis.
a twice-a-week columnist for the "Metro" section
of The New York Times, is moving back to the paper's
Washington, D.C., bureau, and Charles
LeDuff, a reporter, is transferring to the Los Angeles
40, previously with CNN, is joining Discovery Civilization
Channel in Bethesda, Md., where the channel is headquartered,
as general manager. She will oversee all programming of
the network, which is partially owned by The New York Times
is stepping down as editorial director of Playboy
after the magazine's 50th anniversary issue, which is due
out in December 2003.
43, will replace Tom Brokaw, 62, as anchorman of NBC's "Nightly
News" in 2004.
who is media editor of The Financial Times, was named
chief of the London-based newspaper's Washington, D.C.,
bureau, which he will join at the end of September. The
new media editor, who was not named, is expected to be based
in New York.
previously financial news editor in London for FT, was made
New York-based financial news editor.
Ty Burr, 44,
previously a writer-at-large for Entertainment Weekly,
and Wesley Morris,
formerly of The San Francisco Chronicle and The
San Francisco Examiner, are joining The Boston Globe
as film critics on June 17, succeeding Jay
Carr, who retired last month after 18 years as the
paper's film critic.
the former "NYPD Blue" actress and former CNN
Headline News anchor, has landed a part-time gig on Court
The new-look Financial
Mail magazine went back on newsstands in London
on June 5.
who is editor of the weekly, said the "new FM will
showcase the type of robust, relevant editorial content
we know our readers want."
which will make its debut with a September/October
issue, will be devoted to the information needs of commercial
Voice/Data electrical contractors. The magazine will be
based in the Melville, N.Y., offices of Cygnus Business
Media under the editorial direction of Arnold Blumenthal.
800/308-6397; fax: 631/845-2798.
news continued on next page)
Edition, June 12, 2002, Page 4
RAINES SHAKES UP THE NEW YORK
Howell Raines, who has made several staff changes since
being named executive editor of The New York Times a
few months ago, has changed his mind about getting a new
business editor, according to Ken Auletta's New Yorker
piece in the June 10 issue.
After taking over, Raines pressed Glenn Kramon to cut
down on "soft features" and get more news on the
front of the business section.
Auletta said Kramon, who has been business editor since
1997, recalled that Raines would badger him to move more
quickly, not to wait until they nailed down every last detail
of a story, a delay that could give competitors a chance
to beat the Times.
Auletta said Raines was at first so exasperated by Kramon
that he thought of replacing him.
"Raines wanted more news not just from Wall Street
but from Hollywood, the fashion world, and the media,"
Auletta said the Enron scandal "crystallized what
the newsroom admired about Raines, and also what it found
alarming, as he pressed editors to produce page-one stories."
He wanted editors to "forget turf lines," Carolyn
Lee, who is assistant managing editor, told Auletta. He
wanted the Washington and the Houston bureaus, the national
desk, and legal correspondents to get involved, as he asked
for separate stories and also for long narratives that would
give readers what Raines calls "one-stop-shopping pieces."
He told his business editors "The Enron story is
going to be your World Trade Center story."
Auletta said others thought the coverage was excessive.
People worried that "flooding the zone," could
mean diverting resources from other stories.
In February, Raines held a lunch with Kramon and the business
staff, and in his opening remarks talked only about Enron,
mentioning none of the other stories they had produced,
The preoccupation with Enron sometimes overshadowed other
business stories; for instance, in late January, Kramon
argued that "the most important business story today"
was not about Enron but how HMOs were curbing health coverage
for the elderly, Auletta said.
"Nonetheless, Enron made page 1, and the sort of
populist, people-getting-victimized story that Raines usually
relishes-the type of story that, before the Enron scandal
broke, would have produced an indignant editorial-appeared
in the business section," said Auletta.
One reporter observed that under Raines the Times
"is a more exciting place to work," but she worried
that there was "a lot of reporting on the moment."
Auletta said Raines, "who has become a Kramon fan,"
defends himself from this sort of criticism.
"Enron is a huge story, and it's a story of as much
sociological significance potentially as the great populist
reaction to the abuses of the Gilded Age."
National Geographic Kids beginning with the Oct. 2002 issue.
The Washington, D.C.-based magazine, which is aimed at
8 to 14-year-olds, will carry ads and be sold on newsstands
for the first time. Melina Bellows will remain editor-in-chief.
Ziff Davis Media
is shutting down Ziff Davis Smart Business, formerly
called PC Computing. The last issue will appear in
The publisher plans to bring back the title in September
as a newsletter, and will maintain its Smart Business website.
Cygnus Business Media,
based in Westport, Conn., has acquired Melville, N.Y.-based
Frozen Food Age and Food Logistics magazines
from VNU Business Media.
The sale also includes the publications' websites FrozenFoodAge.com
Editors and reporters will remain at both publications.
magazine, which was started 25 years ago as a local
home-and-garden magazine for upscale residents of Atlanta,
was acquired by Hearst Corp.
Lisa Newsom, founding editor, and a dozen fulltime staffers
will continue to be based in Atlanta. The magazine, which
is published six times a year, has a circulation of nearly
has launched a travel website (USAToday.com/Travel)
to provide 24-hour access to travel news, information and
and Andy Raskin
were hired as senior writers by Business 2.0 and
will be based in the magazine's headquarters in San Francisco.
former "Donahue" producer, was named executive
producer of the NBC Enterprises' new "The John Walsh
Show," a talk show scheduled to start this fall.
who was style/decorating editor for House Beautiful Magazine,
was named Real Simple's style director.
45, was promoted to executive editor of The Detroit Free
Press, succeeding Robert
McGruder, who died in April.
32, who has been a correspondent for a morning news program
in London, has been hired as a contributing correspondent
for "60 Minutes II," replacing Chicago-based Carol
news director, and Sue
Stephens, assistant news director, have resigned
from WGCL-TV, in Atlanta. No replacements were named.
Edition, June 12, 2002, Page 7
(continued from page
from $1 billion to $1.5B.
warned OMC that the credit rating allows "little capacity
for earnings setbacks, additional share repurchases, or
sizeable debt financed transactions."
One use of
additional loans would be to help OMC pay back what it owes
to investors in its $1.75B in 30-year zero coupon bonds
if investors exercise this right. Such an option comes up
this July and next February. The amount due back to investors
at this point is a little over half the $1.75B face value.
bonds give investors the right to buy OMC stock at prices
of $143 and up. The $850M offering via Merrill Lynch in
2001 bumps the conversion price up 5% each quarter. It's
$583M in cash in 1999-2001 buying its own stock. Many of
the shares go to employees in the form of "restricted"
shares (no cost to employees) and to cover employee options
that are exercised.
little to say about the stock slide except to confirm that
the WSJ was doing an article on the firm. OMC spokeswoman
Pat Sloan said she knew of "no corporate development
that accounts for the recent market activity of the stock."
71, chairman of the audit committee and a board member since
1992, resigned suddenly last week. The April 15 proxy statement
had said he would remain on the board. The WSJ said reports
were he was "unhappy with management's limited disclosure
to the audit committee about the entity (Seneca) that holds
many of OMC's former Internet assets" (such as Razorfish
PR firms handling about $800M+ in fees and employing more
than 6,000 (Fleishman-Hillard, Ketchum, Porter Novelli,
Gavin Anderson & Co. and Brodeur).
battered by negative comments on the Yahoo! bulletin board.
Fourteen postings urged "strong sell," two urged
"sell," two urged "hold," and one advised
"strong buy." Nineteen messages were posted June
6 and 42 on June 7 (vs. 3-6 messages on a normal day).
a laugh," commented one participant when ML reversed
its downgrade after one week and replaced it with "intermediate-term
Lauren Fine said OMC now presented "a rare buying opportunity"
and that ML's price target remains about $100 a share. She
believes there has been an "overreaction" to the
news about the WSJ article and Callander's resignation.
message posted by "omcmania" gave a 10-point analysis
of OMC's current situation, noting S&P is allowing OMC
"no room for error" in its earnings.
were by institutions, not little guys," said another
message. Comparisons were made to the collapse of stocks
such as Enron and Worldcom.
debate took place over whether the WSJ had the guts to criticize
an ad agency like OMC that buys so many ads in the WSJ.
commented that if the WSJ feels its integrity is being challenged,
"there will be dire consequences." It is the WSJ
that could destroy OMC and not the reverse, said this message.
said OMC is still within "its trading range" (of
said, "There has been a decisive breakdown on the technical
side," and that on the "Japanese candlechart,
OMC shows a bearish three dark crows over the past week,
which means it has a downside target in the mid-$60's."
three Yahoo! participants complained of excessive sales
of OMC by insiders.
site, dating back to May 31, 2000, lists 89 insider transactions
including 70 sales or planned sales; 12 exercises of options,
six acquisitions via restricted stock, and one statement
no instances of insiders buying the stock on the open market.
CEO of BBDO, sold 242,000 shares for $21,373,963. He acquired
$17.1M of the shares by exercising options that cost him
$1.8M. His price for acquiring the other $4.1M in stock
is not given.
CEO of DDB, sold 313,450 shares for $27.4 million in exercising
options that cost him $6 million.
these options with shares that it has acquired in the open
$286M on purchase of treasury shares in 1999; $237M in 2000
and $60.1M in 2001, or a total of $583.3M.
inside tally shows 15 individuals have sold 841,439 shares
worth $71.9M since May 31, 2000. Average price is $85 a
share. Not counted are some planned sales that have yet
to go through. A total of 35,750 restricted shares that
vest in the next few years were given to five individuals.
have grown from five to 15% of stock outstanding at major
companies in the past ten years, said the New York Times
June 6. Costs of grants are "masked under current accounting
rules," said the story by Gretchen Morgenson. Shareholder
groups want the costs deducted from revenues.
a pro-Israel media watchdog group, is pressuring the worldwide
media to "demonstrate moral leadership and journalistic
integrity" and "label Palestinian suicide bombers
as 'terrorists.'" More than 32,000 people have signed
the "terror petition" that it plans to distribute
to editors and reporters.
HR also has
a one-page "Are you tired of terrorists getting away
with murder?" information sheet.
sheet takes issue with media reference to Palestinian bombers
as "militants," "activists," or "freedom
fighters." According to HR, "the media says it
doesn't want to make moral judgments, but these neutral
words suggest some moral justification to the madness."
Edition, June 12, 2002, Page 8
response to a $14 slide in its stock price last week, Omnicom
said it "knows of no corporate development that accounts
for the recent market activity of its stock."
That's a disingenuous remark if ever we heard one.
A better remark would be: "There appears to be a general
loss of confidence in just about anything we say or do."
That would capture the spirit of the 61 messages that deluged
the bulletin board for OMC on Yahoo! in two days last week.
Before anyone can deride such postings, the fact is that
any investor in Enron who followed that company's bulletin
board on Yahoo! would have ditched the stock long before
negative reports started to hit the press. Wild as some
of the comments about OMC are, they're better than the near
zero in explanations that emanate from the company.
This ad/PR conglomerate, which abjures PR for itself, may
singlehandedly prove the necessity of having such a function.
OMC is far from alone
in inviting disenchantment. The news columns are
laden with reports of consumer and investor dismay over
certain corporate practices.
Distrust of corporations "threatens our still-tentative
recovery," wrote New York Times columnist Paul
Krugman in a June 4 piece entitled, "Greed is Bad."
He says evidence indicates that "many, perhaps most,
large companies were fudging their numbers" in the
past five years.
The evidence he cites is a "dramatic divergence between
profits companies reported and other measures of profit
growth" for that period. An NYT news column noted that
"complex financial statements" befuddle the average
investor and that option costs are often "masked under
current accounting rules."
One thing that needs examining is the stock option plans
of OMC, especially after Merrill Lynch said a "staggering"
amount of options has been issued under the latest plan.
Our specific gripe
is that OMC refuses to explain its zero-coupon convertible
bonds, of which it has now issued $1.75 billion ($850M
via Merrill Lynch and $900M via J.P. MorganChase).
Assembling our own literature on this subject, we find that
the fees for underwriting such deals are "often four
to five times as high as those for most ordinary bonds"
(Wall Street Journal, 1/02/02); users may not be
able to tap other forms of credit, and that, "If the
stock plunges, potentially it's a death spiral" (NYT
Floyd Norris column 4/27/01).
OMC, fearing investors may demand their money back within
the next year, is expanding its lines of credit. But Standard
& Poor's has put OMC on a short leash It has warned
that OMC must adhere to its earnings promises, must stop
buying its own stock (for options and other uses) and must
not make any more "sizeable" debt financings.
Also in the dock here
is Merrill Lynch, which handled the initial $850 million
zero-coupon offering. An ML report May 30 by analyst
Lauren Fine said investors should not worry about the offerings
because of certain safeguards. But the report neglected
to note that ML handled the initial $850M offering. Fine's
report said that OMC had to be above $84 on Feb. 7, 2002
for investors not to demand their money back. Since OMC
has now fallen as low as $72, we wonder what that means.
The ML PR dept. is either short-handed or ineffective or
both. "Aides" and "temporaries" usually
answer the phones, asking why reporters are calling. The
PR pros appear to be overburdened with work and handling
a variety of things at once.
None of them could produce an expert on LYONs who would
discuss this complex debt vehicle with us. We recommend
that a bullpen of 4-5 PR pros answer all press calls themselves
and stop hiding behind the aides.
Oddly, we read in the
June 3 Advertising Age that the ad account of ML
at J. Walter Thompson of WPP is $118 million. One
major job of the ad budget is countering all the bad publicity
ML has received over its $100M settlement with New York
State on charges of analyst bias. ML faces billions in lawsuits
from disgruntled investors. Yet PR is being short-changed
in this environment while umpteen millions are earmarked
ML on May 30 announced
that starting in September its analysts will only be able
to give one of three ratings: buy, neutral and sell.
"Strong buy" has been eliminated. Also, under
a new compensation system, analysts will be paid on how
accurate they are and how their ratings benefit consumers.
The New York Post on May 5 had tracked how ML ratings
on 20 top stocks had actually fared. Writer Terry Keenan
found that 18 of the 20 had gone down in the past year in
spite of mostly "buy" or "neutral" ratings.
EMC Corp. ("near-term neutral") was off 81%; General
Electric ("near-term strong buy") was down 35%;
Tyco ("long-term strong buy") was off 60%, and
Lucent ("near-term neutral") was down 60%. Johnson
& Johnson ("near term strong buy") was up
ML customers have lost
$10.3 billion by relying on ML stock ratings, Rep.
Michael Oxley (R-Ohio) said in a letter to The New York
Times June 9.