The Five Dumbest Things on Wall Street This Week

George Mannes

1. Quoth the Telecom Analyst Evermore

What with all the fuss coming out of the Federal Communications Commission last week, we at the Five Dumbest Things Research Lab think it's high time to reveal one of the trade secrets of telecom journalism.

So here goes: What man is key to press coverage of the telecommunications industry? What man's disappearance would bring telco reporting to a grinding halt?

No, it's not FCC Chairman Michael Powell. It's not even Wall Street whipping boy Jack Grubman.

Rather, it's Jeff Kagan.

Never heard of Jeff Kagan? Well, obviously you don't read about the telecom industry. Because if you did, you'd have heard of him, all right.

See, Kagan is the go-to guy in telecom journalism. He's the man you depend on in the clutch. That's because Kagan, a telecom industry analyst, has that rare and beautiful quality reporters treasure: He returns your call promptly, and he gives you a quotable comment you can drop in your story when you're minutes away from deadline. He's what we like to call the quote-a-matic of telecom reporting.

"Every week I give dozens of interviews," says Kagan -- who, you can probably guess, returned our phone call promptly. "Half a dozen on a slow day. On a newsbreaking day, 15, 20, 25 or more. Those are the days I lose my voice."

Kagan certainly gives reporters easy access to that voice. They can call his cell phone. They can page him. They can visit his Web site. Or they can just use the ready-made quotes he emails them on days when news breaks. Kagan has hundreds of reporters on his email list, he says. When he started sending out those little quotes, he says, reporters would call him back for clarification. "Now, half the time, they'll quote right from it." It seems almost pointless to ask what Kagan is saying in all these comments. But heck, pointless is our middle name.

Not to diminish the scope of Kagan's achievement -- after all here is a guy who, by our count, went from 15 press mentions in 1995 to 638 in 2002 -- but we at the research lab find his insights to be, well, OK. Last week's FCC ruling "was an important battle, but it's only one battle in the longer war that's been fought since the Telecom Act passed in 1996," he told The Milwaukee Journal Sentinel. "Customers love bundled services, but hate watching the clock," he told The Roanoke Times another day.

Oh, Kagan! Mentions of telecom analyst Jeff Kagan in print publications

* Extrapolation of 109 articles between Jan. 1 and Feb. 26, 2003 Source: Factiva

These industry analyst quotes are the kind of sound bites editors expect hard-hitting, deadline-pressed reporters to include in whatever breaking news story they're covering that day. The comments aren't bad. They're not wrong. But they aren't remarkable, either.

Somewhat more remarkable was Kagan's recent mass email commenting on Qwest (Q Quote)-related indictments -- analysis that bore an alarming resemblance to a list of business-talk cliches. "Investors have been waiting for the other shoe to drop," he wrote. "With this step, we are now starting a new chapter in what will be a long book on reforms. Now is when the rubber starts meeting the road.

"The days of playing fast and loose with the books ... are over," he continued. "The house of cards that many of these companies built collapsed on them, burying them in a mountain of scandal and shame that they have to dig themselves out of." Qwest's new top executives "are cleaning house from the inside so they can move forward."

Asked about this recent Qwest missive, Kagan pleads no contest, complete with quotes that are pure Kagan. "Some days, you're better than others," he says. "In the body of commentary out there, it's the good, the bad and the ugly."

Kagan makes few qualitative claims about his insights, though maybe he's just being modest. After all, he sold long distance for a time, has consulted with companies on their long-distance needs, and has been working as an analyst for more than a dozen years. Anyway, he scrupulously avoids giving investment advice. "I'm just a voice in the wind," he says. These are just my opinions. ... I don't take myself too seriously. I'm just having fun."

That being said, all these reporter chats -- which Kagan estimates take up more than half his working day -- do have a business purpose. The press mentions, he says, publicize his money-making work as an analyst. That analytical work is pretty much the same thing that he does with reporters, says Kagan: sharing his opinions. But it's mostly in the form of speeches and presentations, he says, for paying, corporate audiences.

After talking with Kagan, however, we wonder whether he does the paying work so he can talk to reporters, not the other way around. "I get lonely when nobody calls," says Kagan. "It's very strange."

2. Flavor of the Month

We like ice cream. We're big fans of ice cream.

But that doesn't mean we eat it at every meal.

Which brings us back to Jeff Kagan, oddly enough. And USA Today. See, in the course of our research, we discovered that USA Today likes Kagan. We mean, really likes Kagan. As in, ice cream four times a day.

In fact, writers at the paper have named him as a source seven times in the past two months and 12 times last year.

USA Everyday Identity of 'telecom analyst' in USA Today, 2002-03

Source: Factiva

Nineteen mentions since Jan. 1, 2002, may not seem like a lot to you, but they do to us. When we ran a search for the phrases "telecom analyst" and "telecommunications analyst" in USA Today, we came up with 61 articles since the beginning of last year. Twenty-nine of those referred to former Salomon Smith Barney Jack Grubman and the quality of his research.

Of the 32 other articles, 19 quoted Kagan. The 13 remaining mentions were split among 11 analysts.

In other words, if a commentator is identified as a telecom analyst in USA Today, there's a 59% likelihood he's Jeff Kagan.

To be sure, this isn't the most exhaustive research the lab has ever performed. Our 61-article sample excludes numerous USA Today articles about the phone industry in which sources are identified as analysts, but not telecom analysts. A quick survey of these articles reveals a wide variety of analysts from a number of different brokerages and research firms. But none get to carry the ball as often as our man Kagan.

We asked USA Today about what makes Jeff Kagan so irresistible. But, in sad contrast to you-know-who, no one got back to us with a comment.

3. Comcast Mr. Tally Man, Tally Me Earnings

Three months ago we boldly forecast that Comcast (CMCSA Quote) would report strong results for the fourth quarter of 2002.

Boy, did we get our comeuppance this week.

Some background. As the Five Dumbest Things Research Lab pointed out in November, the cable operator has a pattern of reporting strong results. As in, over the past seven years, about 70% of Comcast's earnings releases carried a headline proclaiming "strong" results for whatever quarter Comcast was reporting.

Thus, we dared predict last November that Comcast would declare results for the December quarter to be "strong" or possibly "record," Comcast's second-favorite adjective.

Well, when we read Comcast's earnings release this morning, we felt pretty stupid. Comcast's results "Meet or Exceed All Operating and Financial Goals," we read. No sign of "strong" anywhere.

But then we looked at another release Comcast issued Thursday, one announcing Comcast's forecasts for 2003. And how does Comcast characterize its financial outlook?

You guessed it: strong. The show of strength continues unabated.

4. Doubled Over

All hail Big Boy Restaurants International, which Thursday announced it was relaunching its brand around its famous chubby icon in an ad campaign launching next week.

The news gave us goosebumps of nostalgia. After all, the restaurant chain promises that this "inventive approach to branding is a fresh, fun and lighthearted way of utilizing the Big Boy character."

As Big Boy's chief executive was quoted as saying, "For years we've heard from our customers how so many of the special times of their lives have happened at Big Boy Restaurants. Generations of customers have had memorable family experiences at Big Boy: going to Big Boy after school, on their first date, for birthdays and Sunday brunches. Couples have met at Big Boy; one couple even got married at our restaurant. It's those kind of moments that the commercials depict, building on the relationships that people have with the Big Boy character."

That's sweet. But even though the tubby-teen-ager lawsuit against McDonald's was thrown out, and even though Big Boy offers "Health Smart" items like Oriental Chicken Breast Salad and the Turkey Pita Pocket, we at the Research Lab dare say it's premature to forecast the resurgence of a chunky icon at a restaurant famous for double-decker burgers, chili and hand-breaded fried onion rings.

But hey, what do we know. Ask Jeff Kagan. Maybe he has a different opinion.

5. This Just In

Headline from Salomon Smith Barney's report Thursday assessing Comcast's numbers: "Strong 4Q:02 Results...."

Whew. That's a relief.

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