Printer Friendly

Not Grabbing the Non-Low-Hanging Fruit.

The day after the Priceline WebHouse Club, a privately held grocery and gasoline affiliate, was forced to close its doors, Salomon Smith Barney analyst Tim Albright told the press: "They got a lot of usage, but they were generating a negative gross profit on every item they sold. So the more the success, the more the losses."

After reading this explanation, I spent considerable time trying to decipher the phrase "negative gross profit." I also had trouble with Albright's iconoclastic use of the word "success." Clearly, the WebHouse Club's merchandising approach was a variation on the old rag trade dictum that, while individual sales might end up costing the seller money, "the volume overcomes the loss"--at least, in the short term. Indeed, the philosophical cornerstone of many e-retailers is the idea that sales volume will ultimately compensate

for individual losses by enabling retailers to achieve such dominant positions in their industries that they can eventually afford to raise prices and show a profit.

Nevertheless, I was troubled by the use of the term "negative gross profit" because it seemed to be such an unusually nuanced euphemism. What the analyst was really saying was: "These nitwits were losing so much money on each transaction that the faster they sold the merchandise, the sooner they burned through their cash and had to close up shop."

Clearly, dainty, civil terms like "negative gross profit" help to maintain the illusion that the defunct enterprise was run by talented but ill-starred men, rather than the usual cavalcade of inept clowns. More direct, accurate terminology would help to re-anchor the increasingly murky, evanescent world of e-tailing in the real world by restoring the English language to the position it once occupied as an effective communications device. If we continue to tolerate the substitution of the term "negative gross profit" for "loss," and "success" for "failure," we could end up with a whole raftload of perplexing neologisms that no one will understand. Here are a few examples:

Negative synergy. A term used to describe a situation that occurs when two companies that could not possibly complement one another inexplicably decide to merge. Example: "The amalgamation of the world's largest paper company and the world's most aggressive retailer of electronic books has resulted in negative synergy, inasmuch as the respective companies are strategically positioned to negatively impact one another's products and generally despise each other."

Retroactive pre-emptive strike. A term used to describe a belated and wholly ineffective anti-takeover device whereby a target tries to ward off an angry suitor--after the suitor already holds a majority stake in the company. Example: "The next time we launch a retroactive pre-emptive strike, we might consider launching a pre-emptive strike, because they seem to work much better. That way, we'd still have jobs."

Non-low hanging fruit. Objectives that a company would love to achieve, but are not achievable because they are far too difficult to achieve. Example: "It would be nice if the non-low-hanging fruit were actually low-hanging because then we could get our hands on it without having to waste three years and $13 billion."

Posthumous vertical integration. Integration that is successfully implemented after a company has gone belly-up and all the employees have left. Example: "If the Priceline WebHouse Club isn't a prime candidate for posthumous vertical integration, I don't know who is."

Horizontal earnings momentum. Earnings that never go up or down down, but remain perfectly flat quarter after quarter. Example: "Our failure to introduce any catchy new products or cutting-edge services for the 78th consecutive quarter has likely contributed as much as anything to our horizontal earnings momentum."

Non-recurring negative cash flow. A situation that occurs when a company loses so much money that it has to close its doors forever and never has to worry about filing another 10-K. Example: "If we'd told you the company was a victim of recurring negative cash flow, it would mean that we still weren't ready to throw in the towel and shutter the whole operation. At least this way, you meddlesome shareholders have closure."

This is, in fact, a perfect description of the ignominious fate suffered by The Priceline WebHouse Club. Correction: negatively excellent fate.

Joe Queenan is a frequent contributor to The Wall Street Journal.
COPYRIGHT 2000 Chief Executive Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2000, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:author deciphers business terminology
Publication:Chief Executive (U.S.)
Article Type:Brief Article
Geographic Code:1USA
Date:Dec 1, 2000
Previous Article:Monster Under THE BED.
Next Article:Transitions.

Related Articles
Gold Award-winninq MoneyWhys speaks quietly but authoritatively.
Design competition winner The Wire reflects both strengths and weaknesses of tabloid format.
Wade, Nicholas, ed. The New York Times book of language and linguistics.
Information for authors.
Defense AT & L writer's guidelines in brief.
Terms explained: *
Grab the rope and dig in.

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters