Businessweek – the perfect contrary indicator?

I was reading the cover story of the latest issue of BusinessWeek about a steel company named Arcelor Mittal. I’d never heard of Arcelor Mittal before and it was a fine article. It was glowing in its praise of the company and, more specifically, it’s father-son CEO-CFO combo. It got me thinking, though, about a theory of mine.

I believe a cover story in BusinessWeek is either the kiss of death (for apparently healthy companies) or the breath of life (for a struggling one). I believe it’s as close to the perfect contrary indicator as you can find. If BusinessWeek writes a positive story on a company, watch out.

Consider but a few examples I found in 10 minutes of searching:

  • Home Depot – “Renovating Home Depot,” (3/6/2006) a glowing piece about tough-guy Nardelli. That was followed up less than a year later by this cover story, “Blowup at Home Depot,” (1/15/2007) a damning piece about too-tough-guy Nardelli.
  • Martha Stewart Living – “Martha Inc” (1/17/2000), an unrelentingly positive story preceeding a tremendous fall three years later.
  • Amazon – The breathless “Amazon.com: the wild world of E-commerce,” (12/14/1998) some year and a half before the equally dark “Can Amazon Make It?” (7/10/2000).
  • Boeing – CEO Phil Condit on the cover with the story “Booming Boeing” (9/30/1996). Though it appears to now be coming back, Boeing was on the ropes until recently.

It seems that, roughly speaking, if your company is on the cover of BusinessWeek, you have about two years to find a new job. This is a great reason to ignore the noise of the financial media.