Bear Stearns: No-Bonus Mission Accomplished?

On Tuesday night, under the headline "How to Sequence Yourself a Good WSJ Headline," Jack Flack pointed out why it made good spin-sense for Bear Stearns to pre-empt its ugly earnings news by leaking the fact that Jimmy Cayne and the firm's other top executives would not be taking their bonuses. The move provided a great example of the power of sequencing, and Jack Flack played out the three timing options available to the Wall Street firm.

Option 1: Leak the no-bonus info in advance, and watch it get decent play as its own story, and thus color the coverage of the earnings loss.

Option 2: Include the no-bonus info in the earnings announcement, and watch it get buried in paragraph 26 of a summary story rehashing the firm's risky strategy, absentee management and failure to banish the boss the same way two other banks with similar stories have done.

Option 3: Wait a day after the earnings release before announcing the no-bonus info, and watch the coverage characterize it as a punishment, instead of as an act of managerial prudence.

So with today's news that the firm's losses would come in at $1.9 billion instead of the projected $1.2 billion, how successful was the tactic of pre-empting its own bad news with the strategic leak?

All things considered, not bad.

First of all, the leak not only pre-empted Bear's earnings, it also pre-empted Morgan Stanley's news that John Mack and his team would not be taking their bonuses. That alone made the leak worthwhile, as it allowed Bear to be seen -- at least initially -- as the firm leading the executive austerity movement.

(That, of course, assumes Bear's no-bonus news did not force a new decision at Morgan Stanley, and that Mack was already planning on foregoing the bonus anyway. After all, if even Jimmy Cayne is showing prudence, that doesn't leave much wiggle room for Mack.)

What about the earnings coverage?

With Bloomberg alone abstaining, two of the three big wire reports gave the no-bonus news early note, with Reuters hitting it in the second graph.

Blogging Stocks' Peter Cohan did some digging, and determined that the no-bonus moves were actually unprecedented.

Even so, the one-off headline does not seem to be slowing the Cayne narrative, which seems to demand a prescribed outcome.