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Maven: Amazed by Amazon

Marek Fuchs

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Of all the industry practices of business headline writers specifically designed to put The Business Press Maven into an early grave, perhaps the most effective (I have only one foot above ground this morning) is the legitimacy they give to revenue benchmarks. The business media attach superlatives to these milestone numbers as if they mean more than growth rates or underlying profits and -- hey, what are you doing with that hammer and nails? Let me finish!

Take the headlines written about Monday's Amazon(AMZN Quote) announcement, which in most cases appear to be just that: headlines superimposed on Amazon's announcement. In this holy season, I thank God that at least the stock market, which appropriately sent Amazon's stock down, did not seem to be as fooled as the headline writers were.

Amazon, it goes without saying but I will, has probably gotten more mileage out of issuing these benchmark-number press releases and having the media take them as something substantial than any other company. Tuesday's release was no exception to that rule.

The company said, "Amazon.com's 12th Holiday Season is Best Ever."

The wires were soon flooded with regurgitated headlines above stories that were essentially rewrites of the release. But there is only one problem with taking dictation from a company, and it's that you lose any opportunity to draw any accurate, useful or interesting conclusions for investors. Take the Associated Press' coverage; if the AP's headline gives you déjà vu, well, it should: "Amazon.com Has 'Best Ever' Sales in 2006." The subheadline lends undue validity to that benchmark number the company was trafficking in, ignoring for the remainder of the article the interesting aspect of the number: "Amazon.com Says 2006 Holiday Shopping Season Peaks With More Than 4M Orders Placed in One Day."

More than 4 million? Well, how much more? And how does the growth rate (the only thing that matters besides ultimate profits) on Amazon's busiest day this year compare with last year's? Wait a minute! Last year, the company was specific about how many orders it had on its busiest day, 3.6 million. Why not this year? Is 4 million really a big deal if it was just over 4 million and is only up from 3.6 million? Is there a magical quality to the 4 million number? Did the company come even close to that number in the remaining, oh, 30 days of the month?

And here is something kind of remarkable: Amazon's busiest day this year was Dec. 11. Last year it was Dec. 12. But neither of those days is the so-called Cyber Monday, the fake construct the business media have put so much faith in, i.e., the first Monday after Thanksgiving when people purportedly go back into work and place orders for holiday gifts online. What gives?

Not the Associated Press, at least in the arena of answers. Instead, AP recited a few of the choice little facts Amazon often places so cleverly in its press release, little details that give color to an article and that journalists can't resist. The problem is that such details distract journalists, and while some of these little facts can be fun, few point to the only two things that matter: growth rates and profitability.

Watch how Amazon does this in the release in question. The first three bullet points are, debatably, meaningful. The company shipped orders on time, to more than 200 countries, etc. But by the fourth bullet point, it was already trying to distract journalists who -- look at the Associated Press story and beyond -- obliged.

Consider Amazon's fourth bullet point: "One of Amazon.com's most remote shipments was Mission Impossible - The Complete First Season (1966) shipped to Wainwright, Alaska." The Associated Press played stenographer, also passing along the information that Amazon's customers "order enough orange-flavored Airborne cold-fighting supplements to supply every passenger on 192 Boeing 747 planes." Gee whiz, you don't say. But the AP's writers didn't think for themselves and tell us all those things we wanted and needed to know about what mattered here.

Professional stock-pickers were talking about the spread between reality and what came over the wire after the Amazon release in the form of rewritten Amazon releases. The Motley Fool touched on it. But many more should have.

The Business Press Maven has long taken the business media to task for hoping the holiday season's one last chance to be a blowout is just around the corner. This year, a new last chance has been born, and it actually extends beyond Christmas. Because gift cards have become a more substantial portion of holiday sales and can't be booked until they're redeemed, hopeful headlines (and not completely illegitimate ones) abound, such as The Washington Post's "Retailers Try to Extend Shipping Past Holidays: Discounts, Promotions Aimed at Gift Card Recipients," and Reuters' "Gift cards, cold give stores one last chance."

Speaking of the cold, you know how The Business Press Maven turns a whiter shade of pale when any weather front is used as an excuse for anything. While the freakishly warm weather is obviously having some modest effect on sales of winter jackets, hats and gloves, there is a bigger cause behind apparel's uneven Christmas, one the business media are taking note of as a separate factor but not relating to clothing sales.

Electronics, including all manner of flat-screen televisions, initially were seen as the hot product of the season. And they were, according to Women's Wear Daily and others. But the business media seem to have been distracted by the fact that electronic retailers did poorly, so heavy was the discounting. They have not made the connection that the sales numbers, while having little effect on the bottom line of such retailers as Circuit City(CC Quote) and Best Buy(BBY Quote), affected business at various apparel retailers. Holiday dollars are being spent on flat screens instead of tube tops. When you can stay home wrapped in surround sound, who needs clothes? It's enough to make a guy want to pull a foot out of the grave.