Friday, February 05, 2010

Dun & Bradstreet Dividend Bribe Backfires

Dun & Bradstreet (DNB) issued Q4 results and disappointed investors in a down market. The shares sold off quickly. Management did increase the dividend by one cent per share. Given the strategy of dividend signals this should be a sign that things are getting better. Everyone has looked through the increase as just another bribe attempt and is running for the hills.

Management needs to examine their communications strategy. North American is not doing well. Other areas are not that great either. But they continuously attempt to frame their results by saying “results are as expected.” Investors want to know what you guys are doing about the poor results. If you constantly expect poor results, than it’s time for some broad and deep changes.

Oh just to re-iterate, investors lose long term confidence in managements that attempt to bribe through dividend increases when results are off.