Reading Through Schering's Plowing

The reality of the Schering-Plough situation needed to be dealt with honestly.
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Ridiculous and overinflated claims by otherwise competent CEOs are weapons of war against investors. Investors are too apt to believe the nonsense from C-suite unless the business media takes a very specific tact in their reporting. You need to look for it or you risk being taken.

No reporter can come out and say in a reported piece, "the preceding quote by this otherwise competent CEO is ridiculous and overinflated and was uncharacteristically designed to mislead." So what does a reporter do, under the stringent rules of straight reporting (which hold that you can't state obvious and helpful opinions like "this is bull," even when you know better) to more subtly flag your disagreement?

The very next words following the quote should make some form of fun of the quote. That way, the mind of the reader (subconsciously or not) is warned away from the stance by the CEO. Conversely, the quote gains validity if it is followed by words that put the speaker in a highly favorable light. If you take only one thing The Business Press Maven says today as gospel, let it be this -- as a savvy investor who often reads quickly, you must slow down and take note of the words that frame a silly quote or you might be punk'd by it.

They Just Don't Get Schering-Plough!

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We have a pair of classic treatments (one good, another bad) of a recently ridiculous and overinflated claim by the otherwise competent CEO of

Schering-Plough

(SGP)

.

Schering, if you missed it, was all but sat on and misshapen by recent events. If nothing else, reasonable minds can agree on this: Its future is not under its control. The drugmaker pulls in more than half its profit from drugs it markets with another company --

Merck

(MRK) - Get Report

-- and all other things being equal, this puts a portion of its fate out of its control.

The partnership means everything to Schering and, proportionally, not nearly as much to the larger Merck. Now add to the mix all the troubling implications a panel of cardiologists created when it said generics were just as good as the Schering-Merck name brands, which should only be used as a last resort, and you have an out-of-control near disaster on your hands.

Even worse, Congress is investigating whether Schering and Merck were holding back the unfavorable data.

As any muscle-bound pitching legend can tell you, once Congress starts investigating, events can't help but get more out of your control. This brings us right to Hassan's claim that because the company announced plans to fire employees, Schering has its fate in total control.

"We've taken tough actions needed in this tough environment," he said, "We're taking control of our destiny."

I'd say he was grabbing the bull by the horns ... but it's bull.

With their major profit center under attack, a business partner that might be more willing to cut and run than get in the foxhole with Congressional grandstanders circling, it can't be further from the truth.

But

The Wall Street Journal

, in a story titled "

Schering Plans Cuts of $1.5 Billion by 2012

," gives it validity. Right after that joke-quote, it deifies Hassan: "Mr. Hassan has led a revival of Schering-Plough since taking its reins in 2003..." And while the article does then mention that much of the strength was built on the now controversial drugs, it allows him to end on a soaring high note: "Asked whether he should sell the company, Mr. Hassan defended his strong management team and Schering-Plough's pipeline. 'We do believe we can power our way out of this difficulty,' he said."

Got that? Read that one quickly and you'll come away with the impression of a company in control of its own destiny.

Look, by way of more favorable comparison, at the way Lisa Rapaport and Luke Timmerman at

Bloomberg

handle

Hassan's overheated claim

. Right after they quote him talking about control of destiny by "taking tough action now," we get a heading: "No Details."

In case you missed the point, the next sentence reads: "The cuts will concentrate on general and administrative spending, research and development, and manufacturing, Hassan said. He declined to provide details."

Instead of turning the article back to Hassan for a big finish about powering through difficulties,

Bloomberg

appropriately runs "Congressional Probe" as its last heading, tying it all together in the kicker by criticizing lack of data for the troubled drugs. Power that.

Know What You Own

: Schering-Plough operates in the pharmaceutical industry, and some of the other stocks in its field include

Bristol-Myers Squibb

(BMY) - Get Report

,

Pfizer

(PFE) - Get Report

and

Sanofi-Aventis

(SNY) - Get Report

. These stocks were recently trading at $22.00, +0.51%, $21.26, -0.37% and $38.38, -0.26%, respectively. For more on the value of knowing what you own, visit TheStreet.com's

Investing A-to-Z

section.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;

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to send him an email.