(Editor's note: To access some of these stories, registration or a subscription may be required. Please check the individual links for the site's policy.)Last seen during the spiritually uplifting Holy Season, The Business Press Maven was
Well, late Tuesday, guess what: Lennar ( LEN), a Miami-based homebuilder, slashed its fourth-quarter forecast. Guess why. Land charges. It had to write off deposits on land that it no longer intended to buy. As Barron's
aptly put it over the weekend: "Just as a house is not necessarily a home, an order for a house is not necessarily a sale." Now -- as in the case of my near-perfect timing in the Pfizer ( PFE) debacle last month -- I must make clear that I do not possess the power of telepathy. But a bunch of readers emailed last week, asking when I thought the land charges would come to the fore. I said such timing is always difficult, but I thought many of the builders were hoping to be saved by a miracle of a spring selling season; when that didn't materialize, the charges would. That is still a danger, but it is interesting to see how quickly into 2007 the clown parade of charges began. And that taught the business media a lesson, right? In The Business Press Maven's first official act of 2007, he gave the hairy eyeball to a Reuters story that came across the wire at 1:53 a.m. this morning. Guess the headline: " Manhattan Apartment Downturn Short-Lived: Report ." Guess the lead: "The decline in the Manhattan apartment market seems to have been over in a New York minute in contrast to the sluggish U.S. housing market, according to an influential property report released on Wednesday."
If you believe that wishful reading of a few statistics was bad enough, look where the second sentence takes us: "And the Manhattan market could be set for a surge in 2007." From recovery to surge in the space of two seconds. I wish those "For Sales" signs I pass in my neighborhood would disappear that quickly. Investors: If you treat only one thing I say this morning as if it were handed down from a mountain, let it be this -- ignore such contrived bullishness; pay attention to the coming accumulation of charges. On the subject of contrived story lines, few are more common than how easy it is for a CEO to be portrayed as a genius. This lulls investors into a false sense of security that they are in good hands when -- at least in the short run -- larger market forces usually have more to do with how a company is performing in the stock market than CEO brain power. And yet the business media always fall back into the safety of that story line -- the stock is up recently, so the CEO is a genius. Look at a pair of articles that came out in the last couple of days on AT&T ( T). The stock has performed well in only the last year, after God knows how long of doing nothing. Considering the circumstances, the CEO for 16 years -- through many of the miscalculations, miscues and bad luck -- should not be instantly canonized because of one good year, right?
Barron's did a great job in a cover story called "
AT&T's Uncertain Future ," pointing out the challenges faced by the company, which is still operating in an unbelievably competitive arena and is now harnessed to the almost unreasonably high expectations and valuation of the BellSouth deal. In light of these larger forces that hold AT&T's fate in the saddle, CEO, Edward E. Whitacre is mentioned a grand total of once. Contrast that to a love letter from Forbes throwing around words like "renewed" and handing a microphone to the CEO so that he can try to pump the stock up further than it went in 2006. "Shoot," he is quoted as saying, "even now it's way behind. It oughta be up 200%!" With one good year of performance under his belt, he even shouts for revenge against journalists who have criticized his high pay and poor performance. "You tell him he's a sorry bastard," he says, apparently grinning, about one scribe. Rather than questioning whether Whitacre has come down with a bad case of unearned overconfidence, Forbes spends the next paragraph talking about the "sweep and scale" of the AT&T/BellSouth deal. They don't quote his mother, but they might as well. In any case, even in declaring an end to the housing correction, the business media required two months of statically insignificant evidence. Here, it's one year.