NEW YORK (TheStreet) -- Best Buy's (BBY) - Get Report earnings, reported yesterday, were like twigs over a jungle trap. They looked fine or, at least, better than expected. Some trumpeted the earnings as evidence of a comeback. The Associated Press termed the earnings "sorely needed good news."
But there was less there than meets the eye. Far less.
Best Buy's tax rate was considerably lower and there were also less shares outstanding.
But The Associated Press and Forbes -- and many other media outlets -- mentioned nothing about either in their earnings coverage. Zip. Zero.
Marketwatch touched upon the presence of a lower tax rate, but gave no figures. How much lower?
Barron's mentioned the decreased share count, but gave no figures. How much less? That was left to the imagination.
Look: last year's first quarter tax was 34.6 percent. This year's was 30.6. The difference is huge. Shares outstanding went from roughly 400 million to less than 350 million. Also: huge.
There was also an extra week in the quarter, which was baked into expectations, but did give the top line an undeserved shine. Though many also ignored that, at least The Wall Street Journal was all over it: "Revenue rose 2.1% to $11.61 billion as the quarter included an extra week than the year earlier period. Excluding the extra week, sales slipped 4.3%." Alas, they also ignored tax rate and the issue of less shares outstanding.
Best Buy operates in consumer electronics, perhaps the most competitive field in the history of commerce. Moreover, they compete against two brilliant operators in
. A comeback is doubtful, so terming earnings based on a lower tax rate and share count "good news" is terribly misleading.
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.
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