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Maven: Put Amazon's Flood in Context

Most reports miss the vital factors behind its surprising strength.
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Quite often, The Business Press Maven has to smite the sinners in the business media, whose mistakes can be ruinous to unsuspecting investors. Other times -- take, say,


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earnings, reported after the close Tuesday -- seemingly subtle decisions in coverage can give investors a fairly different picture of the same situation. Then I do less smiting than showing.

Anyhow, this much we can agree on: Amazon's report was decent. But throw a dart at the coverage, read what you hit and you'll see something along the lines of this



, which starts with an excited headline: "Amazon raises '07 estimates, shares up."

Then it's off to the races on results, with liberal use of words such as "robust" and prominent mentions of typical Jeff Bezos quotes about new initiatives, "excellent early traction" and "potentially very large," to name two.

Almost without exception, these articles mention a lower tax rate but don't fill out what that means. They tell us that the company's tax rate fell by about half, from 47% to 23%, leaving our level of understanding at one level. But tell us specifically what that means for the bottom line in real terms (i.e., how many millions of shekels it equates to) and we'd get it better.

Amazon even gave that figure on the conference call, so it's not even like reporters have to dig. (More on this in a minute.)

Speaking of digging, I want to hide in a hole when an article these days (more on this over the weekend) gives me no idea how much a company has benefited from a weak dollar. Not that there's anything wrong with benefiting from a weak dollar. But there is a right-place-right-time component to doing so that shouldn't be confused with inherent long-term strength.


writing on Amazon, in grave disservice to investors, doesn't even mention the dollar.

To which The Business Press Maven says: "Yo, what's up with that?" Compare that by-and-large-incomplete effort with the faithful work done by the

Associated Press'

Jessica Mintz

. Given the same amount of space, the writer does not -- and I do apologize for this groaner ahead of time -- mintz words.

By the fifth sentence, the reporter has let us know that whole tax-rate thing boils down to a $12 million donation to the bottom line. She then gets right on to the important business of letting us know that the weak dollar against foreign currency was good for another $5 million to that bottom line.

Again, this is not to say that Amazon's results were an illusion. But it puts the company's strength into proper (read: slightly more modest) perspective. And all from showcasing information that was given on the conference call, the same call I'd assume all the reporters were on.

Isn't it ironic, don't you think, that the


piece did end on an appropriately measured note, with a pitch-perfect quote about how results were modestly above expectations? But without the detail, the fill-out, the quantifying of the gain thanks to the decreased tax rate and the lucky-duck currency boost, you're left wondering why.

On a separate but equally annoying topic, The Business Press Maven has pontificated

before on how the business media's overwrought focus on sales rankings has given investors the wrong idea about what matters in the auto business ("it's the profits, stupid") and probably contributed to a loss of perspective at the American car companies, which have chased the No. 1 ranking and ensuing praise for years by doling out ridiculous incentives just to move a car off a lot.

Anyway, with


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General Motors

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in worldwide car sales, we are getting the typical hand-wringing. As a welcome departure, please read the

Financial Times'

smart and short take


And sometimes The Business Press Maven has to kill a concept in its crib. Let me have the pleasure when it comes to the thoughts arising from an



The New Yorker

on how job cuts don't seem to be making Wall Street happy the way they used to. We see a lot of thinly reasoned junk in the business media, but this, currently the lead story on

The New Yorker's

Web site, is one of the worst offenders I've spotted in a while.

I don't want to spend much time on it, but if these concepts get taken up by the public discourse, investors will be misled.

The article starts with the premise that in the 1990s, there was talk of a "seven-per-cent rule," meaning that when a company announced layoffs, its stock would rise 7%. If that sounds like a stretch to you, the article allows as much in only the third sentence, saying "No one worried too much about whether the rule was accurate," before spending the rest of the article wondering why -- mentioning

Circuit City

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-- the rule doesn't apply anymore.

Uh, it never really applied.

I'd be willing to let that intellectual contortion pass, but in wondering why Circuit City and Citigroup didn't gain on their recent layoff announcements, the article fails to mention two of the most basic elements of layoffs:

    Layoffs are highly anticipated these days. Often, a stock will move in advance of the announcement.

    Smart investors are well aware that announced cuts often don't materialize, and that to get to the promised layoff levels, the company has to take additional write-offs on buyout packages.

    In the end, The Business Press Maven is all too happy to smite

    The New Yorker

    for this sin against investors.

    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, 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;

    click here

    to send him an email.