People often ask me who comes up with story ideas -- the reporter or the editor -- and that question puts me in the uncomfortable position of having to tell the truth.
When it comes to the business media, it's often a bunch of impulsive stock traders who are setting the story lines. This was pretty clear in the vacillating coverage of
earnings late Tuesday and early Wednesday. But before we get to that (and
) forgive me a few sentences of self-aggrandizement to make a larger point about the sorry state of affairs investors face when it comes to puff-files of CEOs.
, the new Condé Naste business publication, and
The New Yorker
, have given The Business Press Maven credit for being the first to strike out against Angelo Mozilo, the now-embattled head of
even said "one of the big reasons Mozilo isn't feeling cozy is that Fuchs was the first to sound the manhunt siren."
Not cozy, indeed.
The New York Post
ran a doctored photo of him in this morning's paper that included a pitchfork in his hands with the fires of hell behind him. Though I'm happy to take credit, let's understand that my comments, though lauded, came
the implosion of the mortgage markets. And that is taken as prescient!
Granted, I never said anything laudatory about Mozilo before that, but that I am (rightly) credited with being early stands as a pathetic lesson about how careful you need to be as an investor when reading worshipful profiles of CEOs, which is the true stock and trade of the business media. Until the implosion, Mozilo was portrayed mainly as a great entrepreneur and a courtly lender.
Now let me get to those beguiling traders -- the power behind the press. With the market strong and technology traders feeling giddy throughout the day thanks to Apple's earnings, Amazon was up strongly in Tuesday's trading session. At 4:01 p.m., right after the market closed, Amazon reported. The first batch of news reports, either directly referencing or obviously influenced by Tuesday's strong showing where Amazon was up 10% and got over $100 for the first time since the end of 1999 (before the dot-com crash), had entirely happy things to say. Check out these headlines:
At 4:06 p.m.,
from Dow Jones, ran with an excited: "
Amazon.com earnings surge in third quarter."
Hot on its heels, also clocking in at 4:06, came an equally enthusiastic headline from paidcontent.org: "
Earnings: Amazon Q3 Sales Jump 41 Percent; Income Soars." The lead said it all: "The market was expecting big things from Amazon, and the company has delivered."
End of discussion, huh? Not exactly. See, Amazon was dropping in after-market trading. So by 4:26, we got this headline and subhead from CNNMoney.com: "
Amazon: Good but not good enough. Web retailer's earnings climb 313% from last year, citing low prices and free shipping; but stock falls after-hours."
That article speculated that the market was disappointed because guidance going forward was not higher.
Just a bit later,
from Dow Jones, which (remember?) had been all positive at 4:06 when writing to the backdrop of Amazon's good Tuesday, was expressing concern when writing to the accompaniment of weak after-market trading. The headline and subhead this time: "Amazon net surges, but outlook worries investors.Shares fall in after-hours trading on margin forecast after hitting $100 mark."
was hardly alone in the rotating headline game. Even
The New York Times
had an evolved take. This was the celebratory headline that appeared on its Web site on Tuesday: "Earnings Show Amazon Is Back on Top." Break out the bubbly!
But Wednesday's paper saw the issue at a more measured distance: "Amazon Says Profit Jumped in Quarter."
Just remember: What you are reading about earnings might very well be shaded by the impulsive reaction of some traders, or even a bit of profit-taking that might have little direct relation to the earnings. All of it can set the course for story lines much more forcefully than editors and reporters. Beware and be aware.
Interestingly enough, of course, we can see battling headlines even when fleeting share price fluctuations are not the cause. Case in point:
. These two headlines came a few hours apart, although the stock was at about the same level:
Schering results miss targets."
The Associated Press
Schering-Plough 3Q profit up on gains."
Finally, a public service announcement. If the article you read about Apple's earnings and expectations for next quarter failed to make clear how Steve Jobs plays the expectations game so masterfully, then please read this
Business Press Maven classic, which has probably been referred to even more widely than my writing on Mr. Mozilo, Countrywide's Orange King.
Here's the gist: Jobs, a hands-down genius of promotion, consistently vexes the business media by the dual nature of his promotional abilities. To wit: When it comes to promoting his product, he is more flamboyant than P.T. Barnum, a real pusher. But, and this is key, when it comes to setting financial expectations, he is consistently low-key, sandbagging, saving and downplaying. If this is not mentioned in what you are reading about Apple, make sure it is set in your mind. It is key to understanding the company, Jobs' confused, conflicted, don't-get-him relation to both Wall Street and the business media and, by extension, Apple's future stock performance.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children. Fuchs appreciates your feedback;
to send him an email.