Reading a Monday newspaper is so entertaining. You can catch up on the sports results, and you can see which companies spent the weekend trying to shape news coverage for the week ahead.
It looks like officials at Apple and Pimco had a very busy weekend.
Apple is facing a damaging report later this week by European Commission investigators, who are expected to be sharply critical of the tech giant’s tax practices. Apple is likely to be accused of arranging highly favorable “backroom deals” with Irish officials to minimize its tax bill – ugly charges for a company that tries to keep a spotless reputation.
Rather than wait for the release of the report – and the full might of the Commission’s press machine – Apple moved first. It offered the Financial Times an exclusive interview with its Chief Financial Officer, Luca Maestri, which ran on the FT’s front page today.
This first-strike tactic is meant to achieve a couple of things: First, it aims to take away the news value of the report and deprive the Commission of a high visibility media event. Sure, other media outlets will cover the report when its released, but their headlines likely won’t be as big. In addition, Apple has been able to set the narrative about its actions and address the most negative aspects of the report without any rebuttal. (There were no comments from EC officials in the FT article.)
Pimco also spent a busy weekend dealing with the fallout from the surprise exit of its star bond manager, Bill Gross. The news lopped of a healthy slice of market value at Pimco’s parent, Allianz, and led to speculation that as the firm could lose up to a third of its assets.
Pimco executives were under further pressure for mishandling Gross’s exit and their slow response in naming his replacement. The firm was caught off-guard on Friday, and resorted to hastily leaking damaging characterizations of Mr. Gross, saying that he was about to be fired for “erratic behavior.” The media played right along, with CNBC happily airing the allegations without any attribution.
With all the turmoil at Pimco in the past months, it’s hard to believe executives didn’t consider the possibility that Mr. Gross would leave, one way or another. Having a contingency plan, with successors identified and a press release written, should have been on someone’s checklist.
In any event, after speaking to reporters over the weekend, Pimco CEO Doug Hodge was quoted in news articles Monday, saying his team was engaged with clients and confident most would stay on board. News reports also included assurances by Allianz executives that the insurance giant “had no plans” to sell Pimco – a very important message.
Pimco may have won the weekend, but it faces a difficult road ahead. Its fund flows will be watched closely, and its new leadership will need to work hard to rebuild a frayed internal culture, all while managing a very challenging market for bond investors.