The Business Press Maven just got finished
Friday telling investors how the business media needs to compare numbers more often -- in this case the number of shares purported to be involved in a share buyback to the shares outstanding -- when I decided to slip back into my normal routine.
I am Henry Higgins to the business media's Eliza Doolittle, and Eliza -- words, words, words.
Specifically, you must compare current actions to the most-appropriate words of the past. It is the only way for investors to get a handle on what is going to happen in the future -- and why.
Look at this week's announcement by
that it would break with tradition and sell through
. There are many ways to look at this turn of events, but there's only one right way. That's mine.
The Wall Street Journal's
-- or at least one of their ways. You -- we -- need to set this week's action against certain past words of Michael Dell, asking the appropriate questions about the apparent inconsistency.
, like many,
did not do this. It ended up with a pretty vapid and positive take on the strategy. The first quote it used is from a press release -- a Wal-Mart ode to how great things will be, a little ditty about how the companies expect high "consumer feedback and purchase response."
"Purchase response" is classic, useless jargon. And not the right words to set this news against. But
goes on breezily, taking its cue from the press release in talking about how the move will be great for all involved.
: "The move helps Wal-Mart bolster its electronics business and gives Dell a new venue for PCs outside of the faltering direct-sales arena."
, which also does not use the appropriate verbal measuring stick,
did not know what to make of the move. It planted both feet firmly in the air with this classic example of the on-the-one-hand-on-the-other-hand form of journalism that gets you no closer to the truth than a throw of the dice.
Its headline, apparently after the interviewing of a grand total of two analysts: "Analysts Not Sure Dell's Retail Plans Will Lead to Improved Profitability." If you think that headline was the definition of ambivalence, the article presses the point: "Lehman Brothers analyst Harry E. Blount in a client note was ambivalent."
Harry, my boy, this is the sort of business endeavor or partnership that is going to either work to save a company or fail miserably. There is no way to nuance meaning out of this. Anyone who cannot form an opinion on this one deserves to have his work outsourced to someone who can at least competently flip a coin.
After quoting Harry as saying he is unsure whether Dell's profitability will be of help, and noting that he kept his "Equal-Weight" rating -- one of those only-in-Wall-Street verbal formulations that serve only to confuse investors and cover the backsides of analysts -- the article quotes a Morgan Stanley analyst, also via a client note, saying she's unsure about the deal.
, for its part, used no quotes in a story with at least a discernable negative bent.
The Wall Street Journal
, interestingly enough, did it wrong one way and right the other. This earns it, for the first time in recent memory, both the dreaded Business Press Maven's "Back of the Hand" award and the coveted Business Press Maven "Nod of Approval."
Dell to Rely Less on Direct Sales: Wal-Mart Will Offer PCs as Computer Maker Seeks a Broader Retail Reach," the
's first quote is from -- you guessed it -- a press release. This go-round, it's a Dell release, all about how customers were asking for additional ways to buy products and how Dell was going to oblige, worldwide.
Get ready for some worldwide purchase response!
The article reaches back into history -- but only back a few months, when Michael Dell, a genius who might be meeting his match, came back as CEO, and a couple of years ago, when the company's troubles began.
Compare that with this
Breaking Views column on the same day in
The Wall Street Journal
that harks back to the quote that everything Dell does with Wal-Mart must be judged against.
First, Breaking Views sets the stage historically: "In 1993,
Dell began selling PCs at Sam's Clubs, a division of Wal-Mart. One year later, it pulled out."
Then come the operative words, the ones that should have been used in all those articles in lieu of press release patter or high-priced equivocation from Wall Street analysts.
Why isn't doing business with Wal-Mart any good, Michael? "This is a no- or low-return business. We like to be in businesses where we can make money, and we know how to do that in the direct business."
Could things have changed since then? Well, maybe -- though if anything, Wal-Mart has the same pricing power but less pull with customers.
So is Dell's move one of absolute desperation? Michael Dell is one of the few businessmen in America who has earned the benefit of the doubt. But when you, astute investor, look at this issue, do so in the way that most of the business media does not. Figure out what -- if anything -- has changed between now and then. If nothing has, the move reeks of desperation. If something is different -- well, do tell. I'm interested to hear.
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.