Good reaction time cripples your opponent in the news business, right?
Never mind the old days when newspapers tripped over each other to get exclusives out so the corner paper boys could shout "Extra! Extra!." Today, an ostentatious level of speed is thought to be essential to competing in news.
The problem is that the emphasis on speed puts investors in harm's way, and needlessly so. We saw a textbook example in coverage late Wednesday of
They Just Don't Get Capital One!
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At 4:05 p.m., after yesterday's close, Capital One reported its fourth-quarter numbers, which could scare small children. Rising credit card losses, as well as other bleak developments, sent profit down more than 40%, to 60 cents a share from $1.14 in last year's fourth quarter.
The press release, like many, was page upon page of self-justifying quotes, bullet points and financials. And that is right where several news outlets went into high gear, feeling their typical need for speed and running over investor toes in the process. Forget news outlet competition. The unaware investor is the one who stands to be crippled.
Within minutes of Capital One looking at its own wallet,
had lurched to the front of the field. They magically distilled those many pages to quick-hit paragraphs, dazzlingly-fast little blurbs, summarizing what we had just read.
Only problem is, as always, these speedy miniatures missed a major fact. At 4:32, only 27 minutes after the press release,
breathlessly came forward with their miniature, which featured this as a second line:
"The company said fourth-quarter net income fell to $226.6 million, or 60 cents a share, from $390.7 million, or $1.14 a share, in the year-earlier period. The results matched analyst forecasts, according to Reuters Estimates."
Whoa, Nellie! A financial firm that matched analysts' forecasts? That must be managerial stewardship at play!
, for its misguided part, followed hot on the heels of
, on an upbeat note, lifting a happy-go-lucky CEO quote from the
press release : "We remain poised to generate above average returns on the other side of the cycle."
Buy that stock, no?
About those expectations. As I see it, none of the media outlets that took a bit of time to digest the earnings released missed out on the defining fact that Capital One revised their earnings to that 60 cent number on only Jan. 10. So they met expectations, but it's hardly consolation. It hardly signifies strength and stability (what investors need on these reeling financials) over the course of months.
itself eventually spied this, once they give themselves a healthy bit of time to look things over and think things through. Within a window of a couple of hours,
came out with an expanded update, mentioning the Jan. 10 profit warning prominently.
In the fourth sentence, no less. From not mentioning it to, given a smattering of time, mentioning it prominently. Presumably
will pick up on this fact eventually. Who knew speed could be such an enemy?
The Business Press Maven truly feels like giving the business media a kick in the rump on this one. Why come out with these quick little blurbs that only regurgitate what is in the press release (often badly) when they so often mislead by leaving out facts that are important to investors' decisions?
The set ways of the business media are probably never going to change, but you, the savvy investor, have to double up on your caution when you read these mangy miniatures.
Anyhow, let this serve as a lesson. If news outlets are going to bust their buns to get out reports on earnings releases within minutes, just remember that with these miniatures, the one-celled amoebas of the business word, investors are the ones who get busted.
Give it some time, savvy investor, like fine wine.
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;
to send him an email.