Earnings Shenanigans Are Upon Us Again

Anyone who knows me or has read this blog a few times knows that I'm a pretty regular CNBC basher.  There are actually a lot of good reasons to bash CNBC, but since it's early and I'm too lazy this morning to list them all out, let me just show you the difference between non-biased reporting and what I like to call the CNBC propaganda machine.  The Intel earnings report makes for a great example.



Yesterday after the bell, Intel reported Q3 earnings.  Back in August, I wrote a piece on Intel just after they came out with lowered guidance for their expected Q3 earnings - click here for a refresher.  So what happens yesterday?  Intel comes out with numbers that beat expectations and what do we see on CNBC or CNBC.com?  Headlines like this:

Intel Earnings, Revenues Surpass Wall St. Expectations

The above headline is a click-able link, so I leave it to you to read all of what CNBC has to say, but more importantly, what they don't say.

Now let's take a look at what CNN Money had to say on the same topic with this headline:

Intel Earnings Beat, but......

Interesting contrast, no?  This headline is click-able too, so once again, feel free to go and read this for yourself, but below is the key message that you don't see in the CNBC article.

In August Intel warned that its third-quarter sales and gross margins would be much lower than it previously forecast due to weaker-than-expected demand for personal computers. The company's actual results were in the high range of its revised outlook but would have missed its initial forecast.

Now I'm not going to argue that Intel seems to be doing better, and that there appears to be some growth in their business.  The point of this post is to illustrate the blatant, biased spin that you will see on a regular basis at CNBC, and also to underscore the games that corporations and the media like to play when it comes to earnings season.  Intel made a downward revision in their forecast on August 26th or 27th, which was two thirds into Q3, because they knew they weren't going to make their numbers.  And to what level did they revise their forecast?  Well of course - these guys at Intel aren't stupid.....they revised down to a number that they knew could easily be achieved and/or exceeded.....et voila!  A perfect example of an engineered positive earnings report, that then gets pumped by the money-honeys at CNBC. 

During the initial euphoria (i.e. the first 5 - 10 minutes after Intel announced) the stock was up 3% or more, but ended up closing in the after hours session at $19.92, just $.14 higher than it closed during the normal session.  Now in the pre-market it is trading a few ticks higher at 19.99.  We'll check back with Intel at some point in the near future to see how well their stock is performing post-earnings and see if traders are really buying into the hype.

Oh - one final caveat...though I've been bashing CNBC, please don't take this post to imply that I think CNN is much better.  I don't think it's any secret that their normal news reporting is biased by a liberal agenda, but they happened to be telling the whole story in this particular article, which made for a good comparison.