Whoa, look out below! Motorola's( MOT) profits fell 94%! How do I know? Well, I read it right there this morning in a headline in The Wall Street Journal. Huh? What's that? You're pulling my chain, right? You mean to tell me that excluding a one-time charge, they earned 6 cents, which is a stout percentage above the 4 cents that was expected? Holy incomplete headline, Batman!
I know Motorola still has plenty of challenges, but don't you think the Journal's headline could have reflected what Friday's article allows, after all, in the second sentence! There was relief among analysts... due to the profit beat when you exclude the charge. The spirit of analysts, or the market, was not down a full 94%.
And don't go writing The Business Press Maven about how this is a reflection of how the business media is overly negative. Puh-lease. It's just a reflection of how frequently headlines tell a different tale than the articles they act as Siren for.
After all, you see how
revenue and profits soared! How do I know? Well, I read it right there in the headline of this
article, which ran all over in including
The Los Angeles Times
on Wednesday: "AT&T's third-quarter profit rises 41%."
Talk about positive! Holy smokes, that iPhone deal with
must have been huge for it. Oh wait... uh, ugh, geez.
In the very first sentence of that same article, the journalist is writing about how results were buoyed by the BellSouth acquisition, which hit up this quarter. Without that, well, the iPhone still helped, but it's a different story.
What's that you say, you self-justifying business journalist who is about to email me a letter? You can't fit every nuance into a headline. Well, the mammoth BellSouth acquisition was hardly a nuance. Plus, look how
InfoWorld managed to tie that in in about the same space: "AT&T revenue up on BellSouth acquisition."
, God bless its little second city heart, manages to fit both the acquisition and the iPhone into a similar space: "
iPhone, acquisitions boost AT&T profit 41%."
Same limited space, entire story told. No investors misled.
Headlines that don't accurately reflect the bodies of articles are an annoyance in many other segments of the news, but they are a psycho killer in business. For one, investors -- especially professional ones -- are mass consumers of news who tend to skim a lot of headlines. This means that they get a lot of their information from them. When headlines are misleading, they are misled.
More to the point, though, due to the frequency of big charges of one kind or another, the takeaway (revenue or profit number) is often only half the story. Put that takeaway in a headline without explanation, and you've only told half the story.
Yesterday, by way of another example,
ran a headline about how
quarterly profit fell, with no qualifiers. End of story, right? Wrong.
pointed the way: "
Belo 3Q Profit Falls on Spinoff Costs." Factoring in the costs, profits were flat.
Why, oh why Ohio, did this happen today, yesterday, two days ago and why will it keep happening for the foreseeable future? Well, it's important for you, the savvy investor, to realize how headlines are made and how those who write the articles are generally not -- under pain of death -- allowed to speak to those writing the headlines.
In fact, gather 'round in a circle and let The Business Press Maven tell you a story about how I learned about this in my misspent youth. Years ago, I was working on Wall Street and, with no formal education in journalism (I wouldn't be caught dead with it) was sending out all sorts of articles on the side. I had not written any of these articles on assignment, I was just sending them in cold, so to help my cause, and because it seemed like the sensible thing to do, I'd slap a headline on my article.
As the articles started to make it into all sorts of publications, the headlines never did. Finally, I asked an editor: "Are my headlines lame? The articles always seem to be bought, but the headlines are thrown in the trash."
"No, they are good," the editor said, "they are catchy and accurately reflect what is in the article."
"So they are good," I said, "but you never-ever use them?"
"We do our own," he answered.
"Why," asked the Business Press Naif.
"Well, because that's the way we do it and speed and space."
Nevermind, too, that the reasons of space excuse hardly exists online. Or that the entire problem can be solved by publications having policies to always get the journalist to approve the editor's headline. That, though, takes time (like two seconds) and would also force a rethinking of traditional boundaries of who does what and who is in charge and sometimes there are time concerns. (
, by the way, always lets me review headlines. If you ever have a beef, it's my fault. I'm not reading the headline for the first time with you.)
But many still don't do it this way and it's the reason you, the savvy investor, are always seeing different stories being told in the headline than the body of the article. It reminds me of the old joke about tradition:
"There is a reason for tradition."
"What is it?"
"Well, it's tradition."
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.