Looking at earnings releases for a daily news roundup that I do for one of my clients, I recently got clarity about the reason management hates the media (a thing that makes media relations’ people’s jobs so stressful).
Management spends weeks arguing internally—the accountants, the IR guys, the lawyers, the CFO and the CEO himself—about how to frame the quarterly results. They finally come to a grudging conclusion, almost all of them believing all the others are either Pollyannas or prigs.
And the press release gets hammered out. And it’s finally released. And the moment it is, these goofy industry reporters interpret the results all over again.
For instance, back in late April the German retailer Metro released its first-quarter earnings.
"Metro Q1 EBIT rises despite German doldrums," Reuters reported.
"Metro Widens 1Q Net Loss," said Dow Jones.
Both facts were true; but the interpretations were different. Same thing happened to Clorox a couple of days later.
"Clorox lowers high end of 2008 guidance range," the Associated Press reported.
"Clorox forecasts eases investor fears, stock jumps," Reuters said.
Again: No factual differences in the stories. Just different interpretations, both of them probably legitimate. But one reporter’s take nudges the stock price up, the other threatens to nudge it down.
You can understand why management hits the roof over this stuff. But have you ever found a way to make management understand that, with a free press (let alone a wild blogosphere), various interpretations are absolutely inevitable and should be received philosophically?
In both of the examples you cited, the differences were only in the headlines. Except for maybe on Sunday mornings, headlines are what most people–including people in management–read. But I’m wondering: do INVESTORS read only the headlines, or do they read the entire story before making decisions? Because if they read the entire story, and the stories are basically the same and all use the facts provided by the company, what’s the problem? (Is it easy to tell that I don’t play the market myself?)