Marveling at the Marvell Turn

When a company reports earnings, savvy investors should really cordon off the area around the stock until the company's conference call.

The problem, as Business Press Maven loyalists well know, is that the business media draws wide conclusions from a narrow set of numbers the company releases along the wire and these vapors become even denser when traders, also acting in the moment, confirm a strong initial notion.

Marvell TechnologyMRVL, which reported yesterday, provides a great example of the way traders and business journalists, two groups who suffer from a high degree of Attention Deficit Disorder, careen toward conclusions before the all-important conference call which offers (gasp) detail.

They Just Don't Get Marvell!

Now pay attention to the timing here.

Marvel reported at 4:25 yesterday afternoon and within minutes we had some headlines so hot they could buckle steel: "Marvell fourth-quarter adjusted net income jumps 495%," screamed MarketWatch.

At 4:34 Barron's runs with this equally excitable headline: Marvell Blows Away Estimates; Shares Up 6%.

You can see how their writing is influenced by the initial, knee-jerk reaction of a few after-market traders, because the stock movement is showcased in the lead too:

"Shares of wireless and storage technology chip maker Marvell Technology Group (MRVL) are up over 6% this evening at $12.25 after the company this evening reported sales and profit for the fourth quarter ended Feb. 2 that handily beat estimates."

But here's something on the day's itinerary that perhaps Barron's should have paid better attention to. After all, they included it right toward the bottom of the article. Only 9 minutes after posting that article, guess what? Conference call time and all the added information that entails. Why not wait to draw conclusions? You didn't really ask that, did you?

Here is Barron's treatment, their excitement still in full flower: "Marvell will host a conference call with analysts at 4:45 pm Eastern time, and you can access it here."

As for that conference call that took place at 4:45, only 20 minutes after the release, and nine minutes after the jazzed up Barron's article, how can I describe what happened on it? Well, how about by referencing the next Barron's story, this one from 5:54, just over an hour after their happy-land headline: Marvell Shares Reversing Gains on Expense Outlook.

My, how times have changed.

You want details? Here is the lead:

"Shares of disk-drive chip supplier Marvell Technology Group (MRVL) are reversing the 6% gain they enjoyed this evening as the company just disclosed to analysts on the conference call sales estimates for the current quarter higher than analysts have been expecting, but also forecast costs higher than originally anticipated."

All this is not to say there was not some positive to Marvell's report, but, as a savvy investor, isn't it worth waiting to weigh it all out? Especially when traders and journalists are tumbling over each other to draw the first conclusions. And especially with this development, noted by Barron's in the (of course) second article: "The company declined to offer a full-year forecast, noting broad economic uncertainty."

Oh Lord. They are not offering forecasts. Remember, folks, when it comes to savvy investors, mum is never the word.

Oh well. Just consider this a lesson learned...and all in about an hour's time.

On that same topic of refusing to forecast, let's revisit Macy'sM, which we spoke about recently in a column Macy's Silence Speaks Volumes to Investors.

Well, it is often said that The Business Press Maven has a face for radio and here I am on National Public Radio's Marketplace show, talking about Macy's going mum on guidance.