(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.) It is an ancient foundation of Business Press Maven thought that the only one to emerge better off from a price war is the consumer. When you are busy paying the Price War King a shilling, there won't be much left over besides imperiled margins and open questions about the future. This runs directly counter to the most basic storyline used by the business media: When there is a loser, there is a corresponding winner. Under this (chronically mistaken) line of thought, one company cripples its competition and automatically emerges better off. Nonsense. In fact, the
very first thing The Business Press Maven ever told you, back on that cold, wind-swept night when we first met, was that if you believe the business media assumption that either satellite radio or the terrestrial kind will win and the other lose, then you are going to get egg on your portfolio. Both "combatants" in the "radio war" are going to lose. Well, the business media -- as we've proven 1,975,346 times since -- do not learn from their mistakes. Late last Thursday, AMD ( AMD) talked down its coming fourth-quarter numbers. The Business Press Maven spent Friday morning scrubbing the market's collective consciousness clean of a widely reported half-billion-dollar mistake in comparable revenue assumption; from there, the business media were off to the races with more of their loose talk about a winner and loser.
Cue the notion that since AMD's business had obviously been hurt by a price war with Intel ( INTC), Intel would obviously emerge better off. When you see fight lingo in the business media, you know that this wrongheaded, sorry excuse for thought is not far off, and Forbes
does not disappoint . Its lead on the AMD warning all but set up the issue as a steel-cage match between AMD and Intel, implying that only one would climb out: "The battle for supremacy in the processor-chip market isn't going well for Advanced Micro Devices." Only two paragraphs later, we had ourselves a victor: "During the fourth quarter at least, Intel appears to be winning." The Wall Street Journal was a little less pugnacious in its word choice, but its more measured tone carried the same message: good one by MarketWatch from Dow Jones. At first, The Business Press Maven did think the article was headed toward a variant of the same, lame stuff. We didn't have war lingo, but we did have a close second: hot kitchen rhetoric. Witness the headline: "AMD needs to prove it can withstand heat from Intel." And we get the subhead "A bloody price war." But the very next subhead says: "Maybe not good for Intel, either." And the last line? "It's a war no one wins." Niiice. That story was from Friday afternoon. Yesterday, Intel reported slightly higher sales than Wall Street's fairly tepid expectations, but margins were disappointing. (Holy Price War, Batman!) And in an essential development, the company is mumming it up on the essential issue of pricing on its processors in 2007. Though Intel is still in better shape (comparatively speaking only) than AMD, that is not good. And it sure doesn't indicate the glory of victory in the wake of AMD's loss. As The Business Press Maven's mother always told him, "When mum's the word on future margins in the midst of a price war, stay clear. As in: way clear." Two combatants. Another simultaneous double knockout. Speaking of stumbling (I know I wasn't, but the knockout transition didn't quite work), Research In Motion ( RIMM) has been, uh, bumbling. The extent of its recent difficulties is seen in a comically constructed lead this morning. It brings home an essential point that both the business media and investors need to be aware of near the top of anything they read: If expectations have been lowered, how many times and when have they been lowered? Any well-intentioned company, as you know, can hit a rough patch for whatever reason and have to lower expectations. But multiple lowerings in a short period of time indicate a business that is tanking quickly, stands as a victim of its own incompetence -- or worse. Here is The New York Times' lead this morning on Research In Motion:
"While news of the shortfall sent AMD's shares tumbling 9.5%, Intel is expected to fare better when it reports earnings. It is Intel's new competitive products and aggressive pricing that have been weighing on AMD's business prospects."Compare these (mailed-in) efforts to a
"Research in Motion, maker of the BlackBerry, released additional preliminary financial results Tuesday, but they gave investors no better sense of the size of the earnings restatement the company will make after a review of its stock option grants to employees.""Additional preliminary" -- you've got to love that. And, still, no one knows what's going on. When language is contorted and still doesn't make sense, stay clear. As in: way clear. And let's end it as they say (as who says?) with a quick word about Sarbox. Surrounded at home by my loved ones over the long weekend, The Business Press Maven was busily ignoring them so I could catch up on my 8-K reading. In Shutterfly's ( SFLY), I read a sweet but simple hate letter to Sarbox from Jim Clark, founder of Silicon Graphics and co-founder of Netscape, who wrote it to resign from Shutterfly's board. It's hard enough to get competent board members, but Clark -- if he is to be believed -- sketches out the challenges that Sarbox can give to board service. He writes:
"As I understand it Sarbox dictates that I not Chair any committee due to the size of my holdings, not be on the compensation committee because of the loan I once made to the company, not be on the governance committee, and it even dictates that some other board member must carry out the perfunctory duties of the Chairman. What's left is liability and constraints on stocks transactions, neither of which excites me."It is not often that you hear talk of what excites people when reading an 8-K.