Corporate Obfuscation: Perverted Language, Buried Facts

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Perverted Language, Buried Facts Commentary. David Pauly is a columnist for Bloomberg News. The opinions expressed are his own.

By David Pauly

New York, May 16 (Bloomberg) -- Corporate obfuscation goes far beyond the fudging of financial statements.

You may think of International Business Machines Corp. as the world's biggest computer company. Not so IBM. Along with what seems like half the U.S. corporate world, it describes itself as a provider of solutions. Solids, liquids or gases?

A capitalist economy is based on the simple premise of somebody selling something to somebody else. But corporate language perverters call sales people ``consultants.'' DirecTV, the Hughes Electronics Corp. unit that delivers television programs via satellite, even has ``entertainment consultants.'' You still get put on hold.

Target Corp., the discount retailer, and Amtrak, the government- owned railroad company, describe their customers not as shoppers or passengers but as ``guests.'' Since when does the guest pay?

A funny thing about the recent stock market debacle was that brokerage firms and mutual fund companies had trouble saying shares had fallen a ton. An Internet message to investors from managers of Janus mutual funds was typical, referring to ``a full year of gut-wrenching volatility.'' Volatility means wild market swings -- up and down -- but nobody talked about volatility during the preceding bull market.

Upside-Down

Those plummeting stock prices forced AOL Time Warner Inc. to write off $620 million in impaired investments in the first quarter. In its report, the entertainment and Internet company said these investments ``experienced other-than-temporary declines.''

That phrase was in keeping with the convoluted English of the company's latest proxy statement to shareholders. That document said the recently merged AOL and Time Warner had ``focused their attention on finalizing their transformative combination.''

Labored language often is an attempt to bury unpleasant news. LTV Corp., a twice-bankrupted steel company, in April announced a plan that would ``preserve high quality manufacturing jobs within its communities.'' Reading on, you discovered that LTV was closing a steel mill and eliminating 900 jobs.

Corning Inc.'s latest earnings report was clear enough but bordered on dishonesty. The maker of fiber-optic wire said its first- quarter ``pro forma'' earnings exceeded the analysts' consensus estimate by 1 cent a share, just as if that were an accomplishment. Corning failed to mention that the analysts' estimates are based on what Corning tells them -- and this looked like just another example of a company low-balling its estimate in order to beat it.

Cycling to Nowhere

General Electric Co., honored among investors for its earnings growth, is also a prototype of corpspeak. The company, which likes to talk about its ``broad-based portfolio,'' reported that first-quarter profit of its ``long-cycle'' businesses rose but that earnings of its ``short-cycle'' businesses declined. The company also said it was benefiting from ``digitization.'' None of the terms was explained.

Asked for definitions, a General Electric spokeswoman said that long-cycle refers to businesses with extensive lead times between ordering and delivering, such as airplane engines; short-cycle businesses deliver goods like appliances and plastics quickly from inventory; digitization refers to buying, selling and working on the Internet.

As head of the U.S. Securities and Exchange Commission, Arthur Levitt insisted that companies share information with all investors, not just selected fund managers and analysts. Perhaps Harvey Pitt, nominated by President George Bush to succeed Levitt, can make them see that full disclosure requires plain English.

http://www.bloomberg.com/feature/feature990018582.html

-- Carl Jenkins (smewherepress@aol.com), May 16, 2001

Answers

Think of it as Newspeak, to go with the "New Economy"!

-- Warren Ketler (wrkttl@earthlink.net), May 16, 2001.

Grandiloquence seems to be the new form of Orwell's "double-speak."

-- JackW (jpayne@webtv.net), May 16, 2001.

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