The Wall Street Journal's headline and reporter Jeff Bennett's opening paragraph concerning Chrysler Corporation's first announcement of financial results since 2007 got right to the key points:
Chrysler Reports $4 Billion Loss Since Exiting Bankruptcy
Chrysler Group LLC lost nearly $4 billion since exiting bankruptcy last year, but the company reported a first-quarter operating profit this year and increased its cash reserves, bolstering Chief Executive Sergio Marchionne's claim that the auto maker will break even by the end of the year.
That $4 billion consists of $3.78 billion in the last 205 days of 2009 and $197 million during the first quarter of 2010. The WSJ and Bennett basically did a nice job, though I have a problem with companies trumpeting "operating profit" when there is an "actual loss."
I wonder if the Associated Press's headline and the opening paragraph from AP reporters Tom Krisher and Colleen Barry presented the situation as well as the WSJ?
Yes, the second paragraph refers to "the staggering $3.8 billion that Chrysler lost from the time it left bankruptcy protection June 10 through the end of last year." But if the never previously reported number is so "staggering," why isn't it part of the headline or the first paragraph?
Answer 1: The AP knows that many readers never get past the headline. Lots of people will see "Chrysler posts $197M loss but cash balance grows" and say, "Gee, that's not so bad. Oh, and things are getting better." That conclusion is more than a little debatable.
Answer 2: The AP knows that many news readers on radio and TV and Internet search result narratives won't get past the first paragraph.
Answer 3: The AP knows, especially because it didn't refer to what follows in any earlier paragraph, that very few readers will get to Paragraphs 16 through 20, where outside analysts question Chrysler's very viability (bold is mine):
Some industry analysts were skeptical of Chrysler's performance gains.
Max Warburton, an industry analyst with Sanford C. Bernstein in England, wrote in a note to investors last week that he thinks Chrysler's accounting profits are "almost irrelevant" and not comparable to other automakers.
"Positive cash flow is being driven by dealer restocking and stretching payables," he wrote in anticipation of Chrysler's earnings release. "We remain unconvinced Chrysler will survive in its current form despite Marchionne's blood, sweat and tears."
While Marchionne's cost cuts have been impressive, Warburton wrote that the company's capital investments have been minimal, and it has been arguing with parts suppliers about payments for machinery to build future products.
But Marchionne, during a presentation on Fiat's five-year financial plans in Turin, Italy, took a swipe at analyst reports that have taken a dim view of Chrysler's operating profits. He compared the writings to the "Boulevard press," meaning tabloid journalism.
"Stretching payables" is a euphemism for "not paying your bills on time and when promised." If a company engages in the practice consistently, it's not long before suppliers either raise their prices to offset the time delay, say "bleep you" and sever the relationship, go COD on all future shipments, or run out of cash themselves and go under trying to meet the customer's demands.
It's hard not to conclude that it's more important to the Associated Press that many if not most of its news consumers think that the union-owned, government-controlled Chrysler be seen as being on solid ground than it is to communicate the full truth in a balanced manner.
Cross-posted at BizzyBlog.com.
