When it comes to big merger news, investors let the media get away with making sleazy deals with sources in exchange for access. The case of the aborted Microsoft Corp. (NASDAQ: MSFT) -- Yahoo Inc. (NASDAQ: YHOO) deal is no different.Investors would be nauseated by the amount of butts that get kissed behind the scenes during these drawn-out sagas. Reporters suck up to companies, public relations people and investment bankers and vice versa. I saw some of this first hand when I worked for Bloomberg and would write about deals from time to time.
Since the number of people who actually know anything about an acquisition is fairly small, members of the media contort themselves into rhetorical knots to protect the identities of the people who are spilling the beans. That's why these types of stories are filled with phrases that no one would ever utter in daily conversation such as a "person familiar with the situation" or a "person familiar with (insert executive's or company's name) thinking"or my personal favorite "a person close to the company."
Investors should demand that the media explain something -- anything -- about why the identities of these sources are being kept secret. The New York Times does a pretty good job of this already, though I was puzzled by a passage in the story by Miguel Helft: "People close to Yahoo! said that Mr. Yang and his team greeted Microsoft's decision as a victory. High-fives were exchanged Saturday afternoon when they learned Microsoft was backing down."
Why the big secrecy? It's hardly earth-shattering to note that Yahoo! CEO Jerry Yang was pleased that Microsoft backed down. He was against the Microsoft offer from the start. What's the big deal with the high-five? Did Helft not want to embarrass those that gave the high fives or those that received them? Moreover, how does a source know that such an event occurred? Did hear about the high fives or witness them first hand? Also, how many people is he talking about? Two? Four? Helft does not say. (Note: I have done freelance work for the Times.)
I am not against anonymous sources, just their use for stupid reasons. That's why I am surprised that the Times editors agreed to give the same protection to the purveyors of marginally relevant information -- high-fiving at Yahoo! -- as they would to someone telling them about something important, like warrant-less wiretaps on civilians.
Comfort Zone Investing: One thriving area of real estate: Apartments
Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
Reader Comments (Page 1 of 1)
5-05-2008 @ 3:45PM
Sramana Mitra said...
Here's Microsoft's Shopping list:
http://sramanamitra.com/2008/05/05/microsofts-shopping-list/