Consider the Source

CNBC's Maria Bartiromo reported this morning that a friend -- an unnamed source at Dell -- told her the PC maker was firing people. Dell told the Fool that the possible inferences are misleading and wrong. Anybody can be wrong, but only with sourceable information can investors progress beyond a mistake and decide for themselves.

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By Tom Jacobs (TMF Tom9)
November 3, 2000

How many times have you heard the phrase "consider the source"? Uttered, perhaps, with a raised eyebrow, ironic tone, or sardonic half-smile? Today's CNBC Dell (Nasdaq: DELL) rumor shows why it should be a Foolish commandment.

During breakfast this morning, CNBC's Maria Bartiromo reported that an unnamed source at Dell told her employees are being fired. She aired this without confirmation from the company, saying she had a call in to them. Her clear implication? Not "Dell's fired a couple of people," but "They're throwing bodies out the windows at slower-growing Dell, so viewers should trade on the information -- or at least hang on my every word for more."  

The Motley Fool then spoke with Dell's T.R. Reid. He had obtained a summary from CNBC and stated that while the company doesn't normally comment on rumor and innuendo, "the possible inferences are misleading and wrong." Apart from normal day-to-day human resources issues in a company with 40,000 employees, he said, any report of "anything meaningful on reductions or terminations is false." Dell's shares hardly moved today; no major news source I could find picked up the story.

Reid thanked us for calling him first before we wrote anything. Thanked us!

I know why. 

The mysterious disappearing source
Time was when responsible editors wouldn't print a story without two on-the-record sources. Yellow journalism and penny dreadfuls abounded, but you weren't stuck with them. Then it became one source. Finally none, asking the reader to trust the reporter -- to be "sophisticated" enough to know and accept that "of course, a White House/Congress/Company insider can't talk on the record, she'd lose her job." Any danger of using a reporter for controlled leaks, or the reporter making something up? Of course not! And I'm talking respected rags such as the New York Times

So now it's apparently OK to float an unnamed source's innuendo to grab customers. Bartiromo didn't say "massive layoffs at troubled Dell." She didn't have to.   

There's a rationale for naming sources -- a reason that the print media requires identification for letters to the editor, for example. It allows the reader to make a decision about the source's credibility. Remember learning how to write a term paper in high school? You had to use a certain amount of sources. In my teaching days (before television), I used to draw a broom in the margins of students' papers next to unsupported statements -- for sweeping generalization. My motto: If it's your opinion, own up to it. If it's fact, cough up the source. 

Journalism moves stocks short-term
Investors know journalism can move stocks in the short term (one of the reasons I'll never be able to time the market). It's CNBC's reason for being. A shock for me in this new job is the email attacking me not for facts in stories, but for even writing a negative story about a company's business, because we allegedly move markets. Foolish investors know that news is trees, but the forest is long-term.

So why does the Fool report news? Because you like business news. We try to put a Foolish slant on the stories we cover. We trust you to consider the sources -- us and those we identify. (When we don't, it's assumed to be a company press release, by the way. And if it's rumor, we say it is and, if possible, who started it.) Our opinions are our own or are attributed. You can weigh credibility. We don't pretend -- and you should never think -- that we know any more than you.

Because we don't.    

We get "fooled" too
For example: Take our recent bamboozle at the hands of Copper Mountain Networks' CEO Rick Gilbert. Gilbert told us that the company would grow 10% to 15% annually. We ran the interview two weeks later. A scant seven days after that, out came the company's dismal quarterly 35% revenue drop and 80% earnings collapse. Doh! 

Bill Mann (TMF Otter) jumped on it, fessing up to Fools about why this happened. This didn't placate the New York Post, which blasted us for Mann's "whimpering excuse," especially this: 

''One thing should be made clear: The majority of writers for The Motley Fool are not trained journalists,'' said Bill Mann, one of Motley Fool 's writers. ''We do not run an 'investigative' type organization. Sometimes the story and the reality do not match. When this happens, a writer ends up looking silly, complicit or both.''

''Copper Mountain's management had some choices in regard to this scheduled interview,'' Mann added. ''It could have canceled, knowing that it could not answer the questions satisfactorily.''

Bill's right. The Post has a point, though, and for my part as a Fool employee, I apologize. 

But this kind of thing has happened and will happen again. We will ask company CEOs questions and sometimes they will mislead us. But it doesn't mean we're happy about having delivered this stuff to fellow Fools. When we get burned, you get burned, and vice versa.

Hello, CNBC? As journalists, when they get a fact wrong, they'll correct it. But when it comes to unfounded rumors, caveat emptor -- and they wash their hands of it.

We trust you to consider the source
In my opinion, we are a media company. And we report news. We try to name our sources, and sometimes we get lied to. I hope we always take responsibility and apologize. But no matter what, every Fool knows that our news reporting is no substitute for sharing with Fools on the discussion board, reading SEC filings, and buying what you know. 

Oliver Wendell Holmes said that the remedy for speech you don't like is more speech, not less. We're for that. When we name sources, you can consider them -- and weigh credibility yourself.  

Your Turn:
What can Fools do to wade through the financial media barrage? Let it all hang out on the Eyes on the Wise discussion board!