This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Investing 101: Don't Be Fooled by Corporate Jargon

Stocks in this article: BBRYIBMCRMWDAYAAPL2354.TW

NEW YORK ( TheStreet) -- In my first Investing 101 article, I talked about the importance of communication between corporate leaders and shareholders. Specifically, I highlighted why investors should find out who, and what, they're getting in bed with.

My goal was not to be cynical. While I do believe the majority of CEOs do conduct themselves with some modicum of honesty and integrity, the Enron bankruptcy taught us to appreciate the things CEOs say with a bit of skepticism until the evidence proves otherwise.

In this article, we will uncover ways investors can pick out "management speak," also known as "corporate jargon," or words that sound good but are often filled with superfluous non-achievements. Let's find the true meaning of vague statements like, "We're taking action to improve execution" so that investors can arrive at what it is that really moves the business and company forward.

Take, for instance, that particular quote above, which was coined by former BlackBerry (BBRY) CEO Thorsten Heins, who was also notorious for using terms like "build and invest in the future." Heins often talked about how his company was "focusing on vertical specific opportunities." Never mind that he stopped short of offering any meaningful detail regarding these ideals, his words were nonetheless interesting. Unable to transform his vocabulary into meaningful results, Heins was fired five months later.

In fairness, though, Heins is not alone in "talking the talk." For instance, although IBM (IBM) commends a great degree of the Street's respect, the company has grossly underperformed over the past couple years, particularly against much nimbler rivals like Salesforce.com (CRM) and Workday (WDAY), two fast-growing rivals that have taken over the cloud.

As with the vague statements made by Heins, in response to recent threats to explain IBM's recent 4% revenue decline, the company's CEO Ginni Rometty said, "We're going after higher margin businesses." Investors seemed content with the statement. What does that even mean?

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs