Apple and Amazon Provide Lessons in Managing Expectations

Last week tech giant Apple Inc. posted record revenue and profit results, which prompted investors to dump the stock, triggering a 10 percent downturn in value in after-hours trading. 

This week, e-commerce giant Amazon, announced its fourth quarter earnings and it missed Wall Street expectations at every level.  Net income dropped 45 percent, yet its stock was up eight percent in the wake of the announcement.

To help explain some of this, Amazon has been making some major infrastructure investments which is a drain on cash and profits.  The theory is that when you make such investments, you will start to see more sustainable returns over the long-term, so long as it’s well communicated and your investors are patient. 

It is debatable how well communicated its plans were because Wall Street’s expectations are presumed to be the result of very clear and public guidance provided by the management team.  Usually, when a company misses expectations, it’s as much tied to performance as how expectations have been communicated.

In any event, the main reason Amazon’s stock did not suffer, but in fact, saw a jump is that operating income was up. Gross revenues were up.  And the company’s Kindle segment is up, though the numbers were not readily available.  Kindle is gaining respect as a viable competitor to Apple’s iPad in some applications.

So what about Apple?

Oddly, the company reported a record revenue increase of 54 percent.  Profits were at an all-time high of $13.08 billion.  The company sold a record number of iPhones in the last quarter.  So why under those conditions would the stock price have gone down?

It’s all about expectations.  The market expected even higher numbers and stronger demand.  There is growing concern that Apple may have so saturated the market with its groundbreaking products that from here there is nowhere to go but down.

The market is now “pricing in” a possible flattening of Apple’s performance in the coming months.

The lesson for communicators is in the management of expectations.  It’s one thing to achieve superior results and allowing them to speak for themselves, and it’s quite another to try to get out ahead of trends and temper enthusiasm enough to prevent wildly volatile swings in stock price.

I’m really not sure what Apple could have done in this case.  The company’s performance has been so off-the-charts in recent years, a correction was bound to happen. But it would be a shame to see a high-performing company not get the credit, and the accompanying rewards, for consistently strong performance.  The key, I think, is in how they help to set expectations for the next quarter and beyond.

Frequently Asked Questions

I’ve met a few people who’ve said they have visited this blog for background before we met. That said, some questions have come up in some of these meetings that I thought are worthy of addressing here.  From time to time, I’ll include some of these kinds of questions and some responses.  Here are three “Frequently Asked Questions:”

1.       Do you have media contacts in my industry?

Over the years, I’ve developed many media contacts, but the industry is very transient, and in today’s operating environment, downsizings occur far too frequently.  Good public relations requires good relationships with the media, but that is not as important as knowing how to navigate news rooms and how to present a good, newsworthy story idea to editors, whether you have known them or not. I’ve followed a process that’s time-tested and true.  Think like a reporter and put yourself in his or her shoes when that reporter has to convince an editor to spare the appropriate resources and time to develop the story.  Answer the questions: “Why is it important, and why do it now?”

2.       What experience do you have in my industry?

My focus is corporate communications, which covers a broad range of industries.  I have experience in professional services, financial services, manufacturing, technology, life sciences, biotechnology, professional sports and several other industries.  Like the answer above  about media contacts, I’ve found that having specific industry experience is less important than having the right experience with the communications issues involved, be it a crisis, an employee communications or investor relations issue, or whether it’s marketing communications.  I have listed some key industries on my Web site that provide some background on industries served.  You can always call, and I’d be glad to candidly discuss any questions you may have on industry experience.

3.       What do I (the client) have to do?

PR always works best when the client is engaged. That means involved from the standpoint of serving as an internal subject matter expert for the development of content, and by being accessible when called upon to serve as a spokesperson to the media and other constituencies.  The more involved you are in the public relations effort, the better the outcome.

Those are three questions I hear quite often.  Just let me know if you have any questions.  

Changes in Terminology Never Stop

Let’s talk about words. Words that we still use but are starting to make less sense.  For example, I still use the word “tape” when talking about video, even when that video lives on a digital file, a DVD or even a BluRay disk.  I should probably migrate to the use of the more accurate and generic term, “video” but old habits die hard.  Blame changes in technology.

I still sporadically call the TV remote the “clicker,” harkening back to when the first remotes weren’t wireless and they made a clicking sound every time you pressed one of the buttons.

Here are some other words we not uncommonly use when another word may be better:

·         “Newspaper” even when we read it online;

·         “Album” even when it’s on a CD, iPod or MP3 file;

·         “Surf” the Internet even when the more common term is “browse;”

·         “Chat room” when the more current term is “online forum;” and

·         “Tape” as a verb instead of “record” or “capture.”

So much for our mistakes, but the constant changes to our terminology don’t necessarily mean that the new terminology is best or makes sense.  Here are some newly emerging terms:

·       “Event horizon” – a turning point in someone’s life.

·       “Big data” – the industry sector charged with gathering, processing, commercializing and using all of that data we’re putting online.  Big data is largely credited with the slow demise of privacy.  George Orwell preferred the term “Big Brother.”

·       “Apps,” which is short for “applications” that allow mobile and other devices to perform specific functions using custom software.

·       “Digital native” is a member of the generation that grew up on the Internet and all things digital, from iPods for music, to the use of the Internet instead of libraries and books for research.  Most took a class on computers in elementary and high school, and more than likely knew more than their adult instructors on the topic.

·       “The cloud” is a term used to describe the use of off-site information or data resources through the Internet.  You may take photos and store them on a server at a location somewhere across the country.  It’s even possible for certain networks to spread your information across several physical locations so that no matter what happens, if you have access to “the cloud” you have access to your information.

·       “Crowdsourcing” is when you take a task or project and instead of assigning or delegating it to a specific individual or group, you outsource it to an undefined group that is usually accessible via the Internet.  A typical application is to throw an idea out to an online group and ask them for their ideas.  Oftentimes, members of the group can see each other’s response and then build on it. 

·       “Generation Z” which is the demographic group of people to come after Generation Y. Generation Z consists of those born in 1996 or afterward.

These are just a few of the terms are starting to enter the general vocabulary.  They’ll creep into our own vocabularies.  Language will continue to evolve, but one thing that cannot be guaranteed is that the new terms will always meet the most basic purpose of words – achieving clarity and understanding. 

That’s one of the first things I learned in college when I encountered an “event horizon” that led me to study journalism.

Lessons from a Rookie's Father

It’s not common that a typical sports story yields a life lesson for its readers, regardless of their interest in athletics.  To be sure, we have all seen our share of coaches who give motivational speeches for business.  Many are stock speeches.

But over the weekend, the not so likely source for some words of inspiration I heard came from the Seattle Seahawks’ rookie quarterback Russell Wilson.  The young man is a team PR person’s dream.

He’s a well-spoken, highly polished, extremely athletic and smart, NFL quarterback.  All of this is sure to lead him to be a top gainer in commercial endorsements in the coming years.  But to whom might he owe his inevitable success?  Let’s start with his parents, Harrison and Tammy, and more particularly for the purposes of this column, his father.

His father, Harrison, a Dartmouth alum, was a lawyer until his death in 2010.  Russell’s mother is a nurse consultant.   

We all know that our parents shape us in ways that cannot be measured, but it’s clear when you see Russell Wilson face the press that his preparation goes well beyond a day-and-a-half media training session.

He’s always polite, confident and positive.  He’s reverent to his questioners, no matter how off-base the question and he stays very focused.   He frequently credits his father for his approach to football and life, and he’s not beyond quoting his dad.

That’s why something he said in a media interview caught my attention.  He said his dad always preached “the three Ps.”  These are: perseverance; perspective and purpose.

Perseverance in this context means to never give up, regardless of the challenges you face, be they real or perceived.  Perspective is to always maintain a sense of context, an even keel where you have the proper sense of the situations you face.  And then purpose, where you have the best possible understanding of your own role. Sometimes that role is a leadership one, where you must step up to the challenge.  And other times your role is in support of someone else or some larger organization or cause.

When it comes to PR, I think the three Ps make perfect sense. 

We all need to know that the first press release, speech or campaign may not be enough.  You have to make a real commitment to ensure you connect with your targeted publics.  Through it all, you have to make sure you have the proper perspective. Sometimes PR or better communication simply may not be enough to solve the problem. Sometimes, the solution lies in an operational approach, a legal approach or a sales and marketing approach.  And that brings us to purpose. Good communication may always be an important ingredient, but oftentimes, it’s best as a support element of the larger initiative.  Other times, such as in certain crisis situations, communications must take the lead.

Football fans or not, I sense that the more people get to know this impressive young man, they’ll like what they see.

Are Tweets Newsworthy?

An entire industry is growing up right now, trying to make sense of social media, and just when the business starts to get a handle on it, the beast breaks the chains and defies logic.  I raise this issue because there is a current trend in traditional media to draw conclusions and assessments on public attitudes based on Twitter activity.

More to the point, the increasing reliance on Twitter posts as a source for news content raises two questions: Are “tweets” newsworthy?  And, do a lot of tweets that follow a particular narrative constitute an accurate reflection of public opinion?

If by now you’re still not familiar with the language of Twitter, a tweet is an online post.  When enough tweets focus on a particular subject or person, the words begin to “trend.”  That means they rise to the surface as the most active word or terms being tweeted at a given moment.

Twitter is very much a real-time media channel, so what may be trending now may be old news in a couple of hours. 

Brent Musburger creates a flutter

Let me use a real-life example to illustrate.  On Monday night during the NCAA national championship football game between Alabama and Notre Dame, ESPN announcer Brent Musburger made a few flattering comments about the Alabama quarterback’s girlfriend – who happens to be Miss Alabama USA  – when the television cameras panned to her during a break in the action.  This is not unusual, but Musburger may have lost his focus for the moment.

As the camera focused on Miss Alabama Katherine Webb in the stands, the announcer said, “I’m telling you, you quarterbacks, you get all the good looking women.  What a beautiful woman. Wow! Woe!”   

Within seconds, Webb’s name started to explode on Twitter.  Before the game, she had a little more than 2,000 Twitter followers.  By the end of the night, she had over 120,000.  It’s two days later and she’s got over 218,000 followers. 

It must be noted that the tone of many of the tweets pointed out the general awkwardness of Musburger’s stated admiration for the young woman, 50 years his junior.  This is typical for Twitter and other social media.  When something spontaneous happens in the media, or a viral development happens online, or breaking news occurs involving celebrities or people, there is a tidal wave of sarcasm and people taking potshots. 

While there are many examples of heartwarming stories going viral online, it seems the majority of social media happenings have something to do with someone saying or doing something, and then the social media universe overreacting, oversimplifying, and overdoing it with criticism.

The flip side of this is when the subject is cute (as in puppy), adorable (as in little children), or attractive (as in Miss Alabama USA).  In these cases, the Twitter-verse stumbles over itself in admiration.

After Musburger made Webb a Twitter sensation during the national championship game, one NFL football player watching the telecast decided to send a private message to her using Twitter.  Apparently, unbeknownst to Arizona Cardinals’ Darnell Docket, it wasn’t private at all.  He posted a public tweet that invited Webb out on a date.  Needless to say, he didn’t use spell check.  His tweet:

“[W]hen gave over, lets go to wing stop then King of diamond.”  As a sidebar, he seemed to say, ‘When the game is over, let’s go to get some wings and then to a strip club called the King of Diamond.’  He also posted his actual phone number.

Given the distance between Arizona and Miami, where the game was actually happening, we can assume to some extent it was a joke… I think.

This kind of bizarre activity has become commonplace on Twitter.  People who have become Twitter fanatics are at once entertained by the social media channel, as they are the entertainers themselves.

Does Twitter deserve the credibility it gets?

This brings me back to the traditional media’s treatment of Twitter and the credibility it’s been assigned as representing public opinion.

Today when you watch a live television newscasts, you may see a graphic at the bottom of the screen where Twitter comments from anyone and everyone rotate, giving up an up-to-the-minute sense of what the Twitter-verse thinks about the subject of the story being discussed.  This is a simultaneous delivery system.   We’re to assume that the opinions of anyone with a Twitter account below are just as worthy of our (divided) attention as the content being provided by a professional journalist. 

The television news executives are caught up in the interactivity of it all, along with the notion that what they think they are presenting to us is a real, live focus group on the subject at hand.

While I find the process of reading tweets while trying to listen to a television presenter distracting, the real issue here is whether social media users and their instantaneous reactions provide an accurate representation of public opinion.

From what I’ve read, the most active social media users fit within some very defined demographics. Within those demographics, the more active users tend to fit within certain identity profiles.  Their worldview may not be uncommon, but in the context of the general populous, they may in fact be a minority.  And even then, regardless of their serious opinions, their Twitter posts are often half-serious at best. 

I heard one media professional sum it up this way, “It’s like we’re being forced to watch college students scribble on bathroom stalls on live TV.”

When traditional media takes its cues from social media, it is highly likely it’s basing its assumptions on the tweets of a microcosm of the public and then using those tweets as the basis for generalizing all  public attitudes with regard to a given story or issue. 

To be sure, there are times that it is newsworthy when a public figure uses Twitter to weigh in on a public issue.  But not every celebrity tweet merits the coverage.  On the man-on-the-street approach to tying Twitter into a news story, I fear that has already reached the saturation point and is counter-productive.

The PR Weight Loss Program

It’s that time of year when marketers of diets and exercise equipment rake in their biggest profits.  Call it “New Years’ Resolution Season.”  Right after the holidays when people know they have to lose some extra pounds, and in the dark of winter, they start to look ahead in think about sunnier days on the beach.  That’s when they make up their minds and start to work on that beach body they’ve always wanted.  As we all know from experience, perhaps, or maybe from what we hear anecdotally from friends and relatives, it takes discipline to succeed.

I’d be the last person to offer up advice on weight loss, but in that spirit, I would offer up some “PR weight loss” ideas.  Here goes:

·         Tools – You’ve got an established communications function and it’s working quite nicely, but it’s been a while since you’ve taken inventory to see what tools you have that you no longer use.  Perhaps now is the time to get rid of the old fax machine in the corner, or that bulky old tube monitor on your desk.  I have been doing much the same recently, and my office is looking more livable.

·         Printed Materials – If you maintain the practice of holding onto copies of publications, annual reports and other materials that you think might serve as good reference points for future work, you might want to consider purging some of that.  So much is now available on the Internet, that even if you want to save it, chances are you can do so on your computer or an external drive.  Your book shelves will thank you.

·         Clutter – January’s always a good time to clean off that bulletin board and take down the papers that say “2009 Budget” or file those photos of you from that 2004 trade show.  The same is true for the souvenirs you may have brought back from some of those events, like the little stress balls that look like globes of the Earth; or the five coffee mugs with corporate logos on them that you never use.

·         Don’t forget the Floor – I have a habit of creating stacks and piles on the floor.  They are usually very neat, I might add, but they are stacks, nevertheless.  Old files I’ve been meaning to go through to decide whether to keep or pitch, boxes, briefcases, etc.  Now might be the time to go through all of that and put everything in its proper place.

·         Your Computer – Some of the most invisible clutter is likely to be on your computer.  Your email may be disorganized and unwieldy.  Your work files may be all over the place.  Now may be a good time to consolidate old files and rearrange your desktop so that it’s easier for you or someone on your team  to find what you need, when you need it.  It may also be a good time to open up some storage on your system by deleting unneeded email and old documents.  Or, if you want to save it, you can always back it up onto an external hard drive.

·         Communications Audit – One of the services I have provided clients over the years is the communications audit. This is a formal system of reviewing the communications function output to find out what’s working, what could work better, and what may no longer be as important from a priority standpoint.  These judgments are not made in a vacuum.  The process starts with an inventory of what you are doing.  It then proceeds to interviews and research among targeted audiences.  And then the feedback and analysis is used to allow the client to step back and think about how to organize to go forward.

These are just a few PR weight loss ideas. I’d be interested if you have any of your own.  Please feel free to send them to me.  Like most people this time of year, I could use them.