Tag Archives: Company coverage
by Chris Roush
Howard Gold writes Friday on Marketwatch.com that the business media has written more favorably about Facebook during its initial public offering than it did when Google went public.
Gold writes, “And after reviewing many articles, I was surprised to find the tone fairly positive. Sure, writers have raised questions about Facebook’s valuation, its ability to grow revenues and its capacity to compete in mobile computing, among other things.
“But almost every piece I read acknowledged the company’s huge success and its dominant position in social networks. And the coverage of Facebook’s founder and CEO Mark Zuckerberg has been overwhelmingly favorable, if not fawning, with only a couple of snickers about his wearing a hoodie to the company’s New York IPO road show meeting.
“Why was I so surprised? Because I also read dozens of articles about the last great Internet IPO, that of Googlein August 2004. And the contrast couldn’t have been more striking.
“The financial media’s take on Google’s IPO was unremittingly negative. I estimate 98% of the articles trashed the company, the whole unconventional Dutch auction IPO process, even its co-founders Sergey Brin and Larry Page. Writers were openly contemptuous of Google’s prospects and warned investors explicitly not to buy.”
Read more here.
by Chris Roush
Jerry Lanson, a journalism professor at Emerson College, writes for The Huffington Post that the business news media is devoting too much coverage to Facebook’s initial public offering.
“‘Facebook’s initial public offering will be the largest and perhaps the most highly anticipated Internet deal in history,’ wrote CNBC in a piece reprinted in the Christian Science Monitor.
“As I write, a corner of that deal is the lead story on Huffington Post Business and No. 2 on the site’s homepage (‘General Motors Says Facebook Ads Ineffective, Pulls Campaign from the Site…’). It was the subject of a long segment on NPR’s Takeway Tuesday morning. An Associated Press-CNBC poll even asked members of the general public for their views (more than half reportedly believe the company is overvalued) — a poll, by the way, quickly picked up by The Washington Post and Time, among others.
“Don’t AP and CNBC have any better way of spending their money than asking the public what it thinks of an IPO? Isn’t there a lot more important news out there? Does anyone recall that there’s still a war going on in Afghanistan (not to mention Syria)? That student loans have climbed above $1 trillion? That JP Morgan Chase & Co. just squandered $2 billion in bad trades? That the economic foundations of Europe are crumbling? That the United States market is dropping at a steady pace?”
Read more here.
by Chris Roush
TALKING BIZ NEWS EXCLUSIVE
CNBC media and entertainment reporter Julia Boorstin is one of the dozens of business journalists covering the biggest business news story of the week — the initial public offering of Facebook.
Boorstin joined CNBC in May 2006 as a general assignment reporter. In December 2006, Boorstin became CNBC’s media and entertainment reporter working from CNBC’s Los Angeles bureau. Boorstin covers media with a special focus on the intersection of media and technology. In addition, Boorstin reported a documentary on the future of television for the network entitled, “Stay Tuned…The Future of TV.”
She previously worked at Fortune magazine, where she was a business writer and reporter since 2000, covering a wide range of stories on everything from media companies to retail to business trends. During that time, she was also a contributor to “Street Life,” a live market wrap-up segment on CNN Headline News.
In addition to its coverage throughout the day, CNBC is running a live special on Thursday, May 17, from 1 p.m. to 2 p.m. ET titled “Facebook: The Social Offering.” It also has additional coverage on CNBC.com at facebook.cnbc.com.
Boorstin spoke with Talking Biz News by e-mail earlier this week about covering the Facebook IPO. What follows is an edited transcript.
How is covering the Facebook IPO different than other stories?\
It’s unusual to get to cover a company since its inception, and I’ve been following Facebook since soon after it was founded. I remember pitching stories on this social network that was limited to college students and having people ask about the non-existent business model and why they should care. It’s been so much fun to watch the company evolve, build out its advertising model, tackle major issues like privacy concerns, and to see Zuckerberg grow as a CEO.
How do you try to make your coverage stand out?
I try to really get inside Facebook’s strategy — why the company makes the decisions that it does about its products and advertising. When the company rolls out new products like Timeline, or ads on mobile devices, users can get frustrated and complain that the company doesn’t know what it’s doing. I try to figure out the reasons behind its decisions. Facebook has the tough challenge of keeping users happy and growing revenue at the same time. Baked into its business are some inherent challenges — how will it manage privacy concerns if the entire business is based on the importance of sharing? Can it make money from ads on mobile devices without alienating users? I always aim to tell all sides of the story — the challenges and the potential.
How competitive is the story?
It’s pretty competitive — whenever Facebook has an event, like the road show in Palo Alto, there are a half dozen cameras and reporters. But CNBC has the advantage of having been all over the story from the beginning — I was the first person to interview Mark Zuckerberg on TV. I know the personalities and the company inside out – people at Facebook and other sources seem to respect that depth of understanding.
What have been some of the reporting strategies that you have used in covering the IPO?
I try to talk to as many people as possible, and I also try to spend time on Facebook. It’s actually really valuable to attack the privacy issues and the advertising as a consumer — is it easy for me to adjust my privacy settings? Am I annoyed by the new ads?
How important has it been to have sources on Wall Street?
They’re always important, especially for a company like Facebook. It’s crucial to know how this company is perceived not just by consumers, and users of the service, but by bankers and Wall Street investors.
Do you think a reporter covering this story needs to read the S-1 and all of the amendments?
Absolutely — it’s crucial to read each of the S-1 updates — you never know where you’ll find something interesting. I find the filings fascinating. It’s such a treat to get a look inside a company I’ve been covering for so long – to finally see the numbers is a thrill! The filings are all about what users are doing and what Facebook’s risk factors are — the raw documents and numbers are so juicy! Facebook has major concerns about privacy, monetizing its mobile users — it puts them all out there. I’d say it’s not just a must-read for reporters, it’s a must-read for anyone considering investing in the company.
I’ve been really proud of how we’ve all worked together, to be ahead of the story, break news, and get inside Facebook in a way that no one else has. Everyone at CNBC has really come together for team coverage — I’m consistently impressed by our open communication. A number of reporters, including Kayla Tausche and Kate Kelly, and a bunch of producers are all pouring their energy into our coverage of this huge story. It’s a thrill to be part of such a great team effort!
Why is this such an important business news story?
Not only is this a simply massive IPO, but Facebook has really changed the way people interact and companies do business. Facebook has encouraged companies to directly communicate with consumers — and (along with Twitter) has empowered consumers to have a voice by posting on companies’ Facebook pages. I think companies realize that they can’t do business without a social presence. It’s also important for investors to understand the risks involved with investing in Facebook — we don’t know how volatile the stock will be. There are many risk factors and investors should weigh them carefully.
How have the reporters at CNBC coordinated the coverage?
We’ve split everything up — my job is to cover everything company related, how the company makes money, what Zuckerberg and COO Sheryl Sandberg are doing to run the business. My colleagues back on the East Coast cover the details of the IPO and the pricing. We talk on the phone and email back and forth to make sure we’re all on the same page about everything.
Anything else you’d like to say about the story and CNBC’s coverage?
It’s been a lot of fun to cover Facebook and this is just the beginning. Once the company is public I look forward to digging into the numbers every quarter!
by Chris Roush
Nicholas Carlson of Business Insider reports that Reuters and Bloomberg News have different takes on how the Facebook initial public offering is selling — an indication that the bankers involved in the deal are playing with business journalists.
Carlson writes, “Buyers who want the price of Facebook shares to go down are telling reporters that supply is weak. Bankers selling the IPO, who want to the price to go up, are telling reporters that the thing is oversubscribed.
“You can kind of tell what’s happeneing because of the way both Bloomberg and Reuters carefully couched reporting.
“The Reuters headline is: ‘Facebook’s IPO already oversubscribed -source.’ That means: ‘one guy who should know told us.’
“The Bloomberg headline is: ‘Facebook IPO Said to Get Weaker-Than-Forecast Demand.’ That means ‘this may not be what’s actually going on, it’s just what some people SAY is going on. So don’t blame us if it isn’t true.’”
by Chris Roush
Thomson Reuters, the parent company of the Reuters financial news service, reported higher first-quarter profits, but the division that operates the news service continued to post sluggish results.
Keach Hagey of The Wall Street Journal writes, “The company on Tuesday reported a profit of $314 million, or 38 cents a share, up from $250 million, or 30 cents a share, a year earlier. Revenue excluding foreign-exchange effects climbed 4% to $3.19 billion.
“The news-and-information provider continues to struggle to find solid growth in the largest segment of its business, recently reorganized under the heading Financial & Risk. Revenue increased 1% to $1.81 billion before currency effects as declines in its segments targeting traders and investors were offset by acquisitions and growth in its risk and compliance business. Operating profit in the division fell 4% excluding the impact of currency changes.
“‘In general, we’ve seen a modest uptick in the Americas offset by challenging market conditions in Europe, particularly in desktops in big sell-side banks in Europe,’ Thomson Reuters Chief Executive James Smith said in an interview. Mr. Smith said he doesn’t expect the division to show growth in net sales until the end of the year. ‘You can’t outrun gravity in the near term.’
“Weak sales in the unit, which contains the core of the division previously known as Markets, led to organizational changes and the departure of several top executives last year, including former CEO Tom Glocer. That performance had largely to do with disappointing sales of a new desktop trading product called Eikon.”
Read more here.
by Chris Roush
A fake news release claiming that Bank of America was seeking public input on how to run the bank was sent to business journalists at Dow Jones Newswires and The Wall Street Journal.
A Dow Jones story states, “Dressed in BofA’s famed ‘flagstaff’ logos and color, the release was sent by email to a number of recipients at Dow Jones and The Wall Street Journal. The release falsely indicated that the information was being disseminated via Business Wire, which routinely delivers press releases to news outlets.
“Dow Jones Newswires mistakenly published the fake press release and a headline about the release around 9:15 a.m. EDT Wednesday. A post from the Wall Street Journal’s Deal Journal blog later reported the press release was a hoax. That post was published on Dow Jones Newswires at 10:52 a.m. EDT. The fake press release and headline were subsequently removed from Dow Jones’s archival systems. Ashley Huston, a spokesperson for Dow Jones, said the company regrets the error.
“A spokesman for Bank of America, who confirmed the release was a fake, said the bank doesn’t plan to take action against the sender of the email.
“A spokeswoman for Business Wire confirmed that the release was not sent by Business Wire, a unit of Berkshire Hathaway, and had no further comment.”
Read more here.
by Chris Roush
By Cassie McLean
Learning the implications of a just a few corporate decisions may be all it takes to foresee distress within a struggling company, said Mark Tatge, former senior editor at Forbes magazine and a distinguished visiting professor at DePauw University.
Tatge spoke at Saturday’s Society of American Business Business Editors and Writers‘ conference in Indianapolis, detailing a concise list of 10 red flags that should cause all privy business reporters suspicion.
1. Deferring expenses: Companies are supposed to match income with corresponding expenses. Reporters should expect that in the period where the revenue is recorded, the expense to create that revenue should also be recorded. The effect of amortization over time means the current company’s profits will be inflated.
2. Pro-forma earnings: Companies that plan to merge or divest often come up with “pro-forma” earnings, an estimate of what the firm will be after the merger. However, the number is often based on inaccurate assumptions. For example, management may include or remove net income that it feels is not “material” to the remaining company.
3. Firing auditors: Often this occurs due to a disagreement over accounting standards and the discrepancy can clue reporters into bigger issues.
4. Burying exhibits: Companies often bury important documents through several levels of reports dating back numerous quarters, or worse, years. To find such items, reporters may have dig through many levels of 8Ks.
5. Fudging inventory: Keep an eye on how companies report the value of inventory, found on the balance sheet, either through FIFO (First In-First Out) or LIFO (Last In-First Out). Companies are required to pick a method and should not switch. Doing so, particularly switching to FIFO in times of rising costs, can produce higher profits.
6. Stock buybacks: Beware. While the immediate impression is that the company is confident in its future prospects, a good reporter must ultimately ask, “Should they be doing something different with their cash?” Additionally, buyback artificially improves earnings per share.
7. Shell games: Companies are forced to set aside funds to cover defaults, decreases in asset values or inventory obsolescence. This pot of money, called asset reserve, is expensed and reduces net income. Thus, if a company has set aside too much, it can recapture reserves, boosting profits and lessening expenses for a given quarter.
8. Pay attention to cash: Look at how much they’re generating versus spending and whether the company has enough to cover current liabilities. Subtract current liabilities from current assets to find out the company’s working capital, how much in liquid assets the company has to pay its debts in the future.
9. Understanding liabilities: Companies will understate liabilities to inflate current earnings. Look for costly contracts or contingencies, like merger breakup fees, pending lawsuits or contractual arrangements with vendors.
10. Blowing deadlines: If a company misses a 10Q or 10K filing, it’s an immediate red flag. Suspect bankruptcy or liquidation, a large charge against earnings, re-valuation of assets or the business itself, or restatement of past financial results.
The challenge, however, is that no one item will get you further than another.
Often, Tatge said, it’s about being a careful reader of financial statements, drawing comparisons and remembering the hackneyed idiom: If it looks too good to be true—it probably is.
McLean is a UNC-Chapel Hill journalism student attending the SABEW conference.
by Chris Roush
Dolan Co., the Minneapolis-based parent company of business newspapers across the country, reported a 28 percent drop in its fourth-quarter earnings due to a decline in its foreclosure business.
David Schaffer of the Minneapolis Star-Tribune writes, “Revenue from foreclosure-related services was down nearly 30 percent, continuing a slide reported earlier last year. Its business and legal publications unit also was down, by 6 percent.
“Meanwhile, the company’s litigation support business grew 70 percent for the fourth quarter, due partly to its acquisition last July of ACT Litigation Services.
“For the full year, that business grew by 40 percent, while its foreclosure-related business declined by 20 percent, the company said.
“Annual revenues were $285 million, down nearly 7 percent, while earnings for the year ending Dec. 31 were $59 million, down 36 percent from 2010.
“For 2012, the company estimated revenues of $301 million to $318 million. It estimated adjusted earnings before interest, taxes, depreciation and amortization of $61 million to $68 million for 2012.”
Read more here. Dolan owns the Long Island Business News, Mississippi Business Journal, the Colorado Springs Business Journal, the Idaho Business Review and the Daily Journal of Commerce in Portland, Ore., among others.
by Chris Roush
Noting that Michael Bloomberg won’t be listed in its new billionaires list, Ryan Chittum of Columbia Journalism Review writes that Bloomberg News needs to report on its parent the same way other business media report about themselves.
Chittum writes, “How can you write about, say, turmoil in Thomson Reuters’s markets division without writing about its chief competitor? Or write about the magazine industry without writing about Bloomberg BusinessWeek’s resurgence? Or calculate a Billionaires Index without tallying up your owner, whom Forbes says is worth $20 billion (which I should note is not enough to be in Bloomberg News’s Top 20).
“As I’ve written with The Wall Street Journal and News Corporation, I’d hardly expect a news organization to go out there and launch muckraking investigations of its parent. I said then that ‘What we should expect is that the WSJ, as a comprehensive business paper, will report the news as it develops, disclose its ownership, and display the story appropriately for its readers.’
“The same goes for Bloomberg.
“You can’t just not cover a major company sitting at the heart of a major beat when you’re a comprehensive news service. Nobody’s that special.”
Read more here.
by Chris Roush
Mat Honan of Gizmodo writes about how Apple’s news conference on Wednesday is affecting coverage of other tech companies.
Honan writes, “How important? Here is an anecdote: A major player in the consumer electronics industry had an event planned on Wednesday morning at the same time as Apple’s announcement. It was a chance for an intimate group of technology journalists to meet with a C-level executive, and to walk away at the end of the meeting with unreleased products to review.
“Journalists love this kind of gathering because, above all else, we are dicks; the chance to hector a top executive at one of the world’s largest companies for not being Apple, in an intimate setting, surrounded by your equally unimpressed peers, and then walk out the door with unreleased products to review is what we love to do.
“Nonetheless, [Redacted] had to reschedule its event due to lack of interest. Too many inky hacks pulled out to cover Apple instead. We, the Press would rather sit in a dark room, unable to ask tough questions or actually touch and test an Apple product, than do our job. We would rather serve as a gateway for Apple’s live action press releases.
“And unless you accuse the media of being biased towards Apple products, you should have figured out by now that none of us even care. Who cares. Nobody cares. We are all so jaded and cynical that if cow shit brought in an audience, we would all be sitting in a pasture, DSLRs in hand, waiting breathlessly for the next patty to fall. Or at least, many of us would.
“We cover what we cover because it’s what you want us to cover. And as long as the audience comes in, we’ll be there to receive you.”
Read more here.