Wishing, The Business Press Maven's mother used to tell him, only wounds the heart. Yet I still find myself wishing that the business media will one day be able to connect a pattern of events to draw a wider conclusion, one that will help investors recognize the single biggest development in modern consumer electronic retailing.
But since mothers are always right and the business media are too busy transcribing management's explanations for their dismal results to give voice to the permanently altered environment in consumer electronic retailing, I will have to speak the larger truth -- and wisely.
announced what the business media have called an "unexpected" loss yesterday, almost tripping over the heels of
, which reported "weaker-than-expected" results. The Christmas season's supposed gravy train -- all manner of flat-screen and plasma TVs -- ran off the tracks, tumbling into a ravine, smashing all those flat -- well, you get the point.
The stores still sold a lot of televisions; they just weren't making money on them. As a sidebar, this obviously confirms what The Business Press Maven has been
shrieking his pretty little head off about concerning how the media's focus on the size of the holiday-shopping crowds does not necessarily mean that stores -- and, by extension, investors -- will make any money.
The Wall Street Journal
even notes that some of the explanation for crowds at Circuit City had to do with its 30-day price guarantee. These shoppers were entering the store repeatedly to get their lower price match, even while the media were nodding approvingly at their presence.
The Wall Street Journal
, which should know better but rarely does, fails to see the new and essential dynamic at play in the "unexpected" speed at which prices on these TVs plummeted.
Neither do the rest of the business media, which this morning are blaming promotions or competition from
. But promotions were not invented yesterday, and these discounters, while admittedly increasing their efforts to sell electronics, have been around for a long time.
What we are dealing with here is the unprecedented speed at which prices of a new technology fell. Prices of new technology have always trended downward at a reliable pace, but this was something new in terms of pacing, and any investor who wants to understand why needs to put pen to paper and write this down:
The Internet has made price declines in commodity technology products such as flat-screen TVs come much quicker. It takes little time and no mileage costs to check prices online, particularly with price-comparison Web sites. As such, the price declines that used to unfold over, maybe, two years now come fast and furious over the course of a single holiday season, or even a portion of the same.
The Business Press Maven is a volunteer firefighter and knows that for many fires, there is a potential accelerant. Not to belabor the point, but these price cuts -- which have spread like a California brush fire -- have an obvious accelerant: the Internet. It is something to look for in technology's future, at least for commodity products. Consumer electronics retailing has always been a difficult business -- just ask Highland Superstores or Crazy Eddie. But it just got more difficult.
Readers write their Business Press Maven often, and after telling me that my business media criticism is a form of high art and complimenting the devilish good looks that jump from my column photo, they often ask me how there can never be a single case in which weather actually has a meaningful long-term impact on a business.
As you know,
I am very troubled at how companies blame all manner of weather swings (too hot, too cold, too moderate) for business shortfalls, and these often contradictory claims -- or blames -- are passed right along by the business media as fact instead of farce. (Especially in the retail field, though
may have set a low-water mark.)
Well, folks, I found a company that had every right to blame the weather, when by the light of my Yule log, I was read a
Rohm & Hass
. It lowered fourth-quarter earnings estimates by 7 cents, blaming the warm weather for a decline in salt sales and profits.
Check out what, in my predawn haze this morning, I believe to be the only other publicly traded salt outfit,
. Trouble there, too, no thanks to the warm winter. Their product, salt, is used in de-icer. To say that the warm weather has an impact is legitimate.
The producer price numbers released Tuesday were not good news and cannot be blamed on heat or cold. With many government reports, The Business Press Maven screams himself silly talking about how the business media neglect to mention how often and significantly the numbers are revised.
This does not tend to be the case with producer price numbers, to the point that I think the
of meaningful revision prospects should have been mentioned to help investors understand. However, these numbers were not as bad as they looked, as the stock market realized after a brief coronary.
does a good job
I only wish everything else -- even consumer electronics retailers -- could have been written with such calm insight. Then again, as The Business Press Maven's mother used to tell him, if wishes were horses, then beggars would ride.
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.