The Business Press Maven does not believe in the reincarnation of the human soul, but he has been forced into a belief in the reincarnation of flawed story lines. Then again, maybe the concept of reincarnation is too much to attach to the sort of hand-me-down angles that lose unsuspecting investors money. So call what we've seen (for the second time running) on
as either a zombie story line or a used angle. Just don't invest money unless you understand what is going on.
The pair, we're told, has been eyeing each other longingly in what company officials are dubbing a potential "merger of equals." If corporate hucksters want to use the image of a wedding-day promise to peddle their deal -- well, The Business Press Maven can't do anything to stop them.
But when reporters repeat the claim without obviously holding their nose or subjecting it to serious examination, The Business Press Maven wants to perform some kung fu on them.
After all: it was only five years ago that this duo was looking at that same "merger of equals" before their flirtations broke up on bad terms when the two concluded their future together was unworkable. Among other reasons for the breakup: Lucent felt like Alcatel was going to swallow them whole, never a good feeling to have as you are entering wedded bliss.
If these same firms couldn't hook up on anything close to an equal footing in the recent past, investors need to understand that at the precise moment when a company official is quoted calling this deal a "merger of equals."
In fact, wedding-day imagery is broad and loaded, and should be purged altogether from merger coverage. But The Business Press Maven did give an official nod of approval when I read a Michael Rapoport story in
The Wall Street Journal
on Tuesday, long after the "merger of equals" phrase gained enough currency to become part of conventional wisdom (but better late then never.)
The article looked at valuation. Alcatel is worth more than 50% more, which means it might ultimately swallow Lucent and, wait --
haven't I been to this bar before?
Also, Rapoport notes in the sort of basic brilliance that is lost when journalists run for the familiar territory of weddings, Lucent is allowed to lump income from its pension plan into its operating earnings. Without that, its multiple is much higher. Again, Lucent looks less like an equal partner.
And will Lucent be any more comfortable with this inequality now than before? Maybe, but let's examine that rather than letting corporate hacks define everything as even-steven to start.
Before I sign off on this one, let me say that the concept of equality is a subjective one, and, to my mind, there have been a small number of "merger of equals." Take
deal. But a merger, like a marriage, is complex -- so as an investor you cannot trust coverage that is too obviously orchestrated by the companies involved, especially if their last fling ended in tears and heartbreak due to issues of inequality.
Clown Parade, Reprise
While we are on the subject of used story lines, let The Business Press Maven take one of his own out of the cupboard: the vapid, personality-focused coverage of
chair Ben Bernake and the dangerously misplaced confidence that he is not going to budge interest rates. I noted
back in January that what had become an article of faith among business reporters -- that everything in the stock market was cool because minutes from an FOMC meeting indicated that interest rates would tread water -- wasn't worth jack's shoe because Bernake, not yet sworn in, wasn't even in attendance.
Holy oversight, Batman!
Then Bernake was sworn in and we read all about how his mom and dad VCR'd the ceremony and what an understandable speaker he was, unlike you-know-who. In these stories about how rates would stay where they were and how cool Bernake was there was much less talk about his goofy inflation targets and his notion of spanning the world for economic statistics to base his thinking on.
The process of setting rates on the vagaries of future (mostly) domestic statistics has always been slipperier than a Mississippi eel. Can you imagine the uncertainty now? Especially with oil and gold prices so high and, at odd intervals, inflation peeking around the corner?
The Fed boosted the funds rate to 4.75% on Tuesday and reiterated language about how further firming might be needed to deal with inflation. Pretty clear about what's happening, says this particular Business Press Maven. So what story line did the Associated Press take out and dust off from the closet?
"Analysts: End of Rate Hikes Might Be Near: Fed Nudges Rates Up for the 15th Time, but Analysts Say End Could Be in Sight."
A grand total of five analysts were quoted, which potentially makes, in the end, two-and-a-half marriages of equals.
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 website 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.