CEO Steve Jobs, one of the few American business leaders The Business Press Maven would grant the benefit of the doubt, stood up at a press conference and declared that I had no nose on my face, I'd give the claim serious consideration. But I would be crazy to believe the claim without seriously challenging it in print. Why? Because of what we already know.
And the three items we already know point to why the last day of reporting on the iPhone price cut is the worst we've seen in a long while. Investors, beware. And be aware.
Here's what we know about Steve Jobs, for starters: He's as cagey as they come. He is constantly fudging expectations, and the business media are always blind to how: He hypes products at introductions but is actually overly conservative with financial forecasts.
The dichotomy is lost on the business media.
Here's what we know about the iPhone: The reporting on it to date has been dismal, with journalists
unable to decide even on the range of expectations from the get-go, the ABCs of financial reporting.
Here's what we know about Apple: It doesn't have a whole lot of experience with a dud of a big product. We are essentially in uncharted territory. And this is something that you, the savvy investor seeking to make sense of it all, must know: That's always a territory pocked with mines for the business media.
Put it all together and it brings us to Wednesday, when Steve Jobs got up at a press conference, unexpectedly said that he was slashing the price of the iPhone and promptly declared victory, saying that the the move was one made out of strength and that it would push sales. He made other product announcements at the same press conference, in large part, one might surmise, to bury this Steve-the-Price-Slasher news.
Now, if you can name a product in the annals of commerce that was introduced to great fanfare and shortly afterward had its price slashed to ribbons where that worked out to be a
, well, do let me know. I'm all ears (I do have those, I'm certain. Just email.) Perhaps, you might say, the cell phone counts as an example, but to my way of thinking, cell phones are notoriously flashy products that become commodities faster than any other.
To its proponents, the iPhone was supposed to be better than a cell phone. To its detractors, the iPhone was nothing more.
So what did this sudden price cut mean? It entails guesswork, as Apple plays day-to-day sales close to the vest. But to The Business Press Maven, it's obvious that iPhone sales have started to peter out and that the company was worried about making sales goals in a much more competitive sphere than it's used to (Apple didn't invent the cell phone; there are actually a few other players out there, and the iPhone, for its part, has flaws), so it cut prices and tried to fold the announcement in with several others.
Does Jobs deserve some benefit of the doubt? Could he be telling the truth while still twisting expectations in some slightly heretofore unseen way? Yes. Remember, he is a master at this sort of thing. But we've also rarely seen him with a loser in hand.
So, to give investors an accurate portrayal, we need balance in coverage, right? Raise a big eyebrow about the price cut and include the outside possibility that Jobs is pulling a real fast one and actually telling the truth about it being a good thing, right?
Oh, so wrong. Check out how much of the business media simply played dutiful stenographer to Jobs. It's a crying shame.
, it was
a "bold move,"
that investors, who reacted (unlike the business media) with bitter disappointment to the surprise price cut but had pushed the stock up ahead of the top secret announcement, were buying on the rumor but selling on the news.
Uh, there was no rumor of a notably gruesome price cut. That would not have made the stock fly in the days before what was billed as a "special event." True, a tweak of the iPod line was announced, but it looks much like the iPhone, and that prompts me to ask: Will the unique look of the iPhone, a major selling point, be lost?
Investor's Business Daily
the thoughts -- and I use that term lightly -- of an analyst who essentially says: This was the plan all along, to take an ax to the price by a factor of a third. Uh, dude, if it was the plan all along, they sure didn't account for the rebellion of the loyal Apple customers who waited in line for the higher-priced iPhone weeks back. Jobs had to rush out an apology and store credit to those suckers.
, for its lame part,
Jobs' spin hook, line and sinker. They led by saying that the price slash was done win the aim of "dramatically boosting its holiday business." Once again, the business media fell for the flashiness of top-line growth vs. bottom-line profits. And the first quote after Jobs' pontificating about putting "the pedal to the metal" showcases an analyst playing
"Apple skimmed the cream from the market in the initial months, and now they're getting really aggressive."
So aggressive on pricing, it would turn out within a few hours, that those loyal customers who were skinned -- I mean skimmed -- rebelled.
Anyhow, this iPhone coverage has been one for the record books of putrid business media work. It all gave The Business Press Maven a nosebleed, and, thanks to Steve Jobs, I'm not even sure I have a nose.
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.