Two leading Washington-area companies have just provided striking examples of what can happen when corporate statements fail to convey the message that was intended.
In the case of Geico Corp., it was perhaps a matter of being too expansive in discussing growth plans. By contrast, Dart Drug Corp. has abetted speculation about its future by not being expansive enough in its public statements.
Ultimately, corporate communications from both companies have been made about as clear as cryptograms.
Geico Chairman John J. Byrne triggered speculation in the investment community when he told a reporter in early March that the firm was considering several ways to expand.
At least five or six possibilities, including merger with a big casualty insurer, acquisition of a life insurance company and investment in a savings and loan are being looked at, Geico said.
But Geico subsequently denied that it was negotiating with other firms about an amalgamation, merger or purchase. In issuing the disclaimer, a Geico spokesman explained that a Dow Jones reporter caught Byrne in a "particularly expansive moment."
With that explanation, Geico merely added to speculation about its future plans. John Byrne is no neophyte when it comes to planning corporate strategy or in his dealings with the press.
In leading Geico from the brink of bankruptcy seven years ago and in directing its success since then, Byrne has been neither careless nor unwisely expansive in discussing the company's business.
Besides, Byrne made it absolutely clear that Geico isn't negotiating with anyone. "We are just analyzing five or six ideas," he was quoted as saying.
The New York Stock Exchange suspended trading in Geico's stock after the interview with Byrne was sent out on the Dow Jones news wire. But instead of emphasizing that it is studying possible opportunities, Geico chose to deny something that Byrne hadn't said.
Ironically, while all of that was taking place, Metropolitan Federal Savings and Loan Association of Bethesda was letting it be known that it is interested in a merger and that it has discussed the possibility with several financial institutions, including insurance companies.
Might Geico be interested in acquiring a financially sound, $430 million S&L only a few blocks away from its headquarters?
Geico denies holding discussions with Metropolitan Federal. The latter refuses to identify firms with which it has discussed a merger.
If Geico has raised questions about its plans by being expansive, then Dart Drug Corp. has accomplished the same thing with its usual reticence.
Dart issued a terse announcement in early February that it was planning to sell stock in its Trak Auto discount parts and accessories chain. Investors greeted the news with the enthusiasm of a bear in hibernation.
In the four or five weeks that followed that announcement, the price of Dart's stock remained relatively unchanged in over-the-counter trading, hovering around 33 bid, 34 ask.
Then for no apparent reason, the price of the stock soared from 35 1/2 to 48 1/2 in a single trading period in mid-March.
The run-up in the price of the company's stock has been attributed to news about the public offering of common stock in Trak Auto. But analysts are at a loss to explain the sudden interest in Dart's stock more than a month after the Trak Auto announcement.
Dart officials have neither confirmed nor denied them, but "there are recurring stories about Thrifty Corp.of California and Dart combining," says Eliot Benson, research director at Ferris & Co.
Other analysts say the relationship between Dart and Thrifty could lead to a spinoff of the local chain to Thrifty, which also owns a chain of drug stores.
Dart formed a corporation last year to operate a group of Trak Auto stores in California. It sold a half interest in the new corporation to Thrifty, which also holds a 50 percent interest in Crown Books stores, another Dart subsidiary.
Conceivably, Dart could put the book chain on the market as well, Benson noted.
But Trak Auto and Crown Books are "highly profitable operations," observes Kenneth Gassman of Wheat, First Securities Inc. "And if Herbert Haft Dart's chairman determines that specialty retailing is his niche, then it would make sense to concentrate on that if they find it more profitable.
"Watch for Dart to get into something else more heavily than drug stores in the next five years. That would be my call," Gassman says.
Attempts to reach Dart officials have been unsuccessful.