One of many of life's truths is that when there's bad news about a company -- or even not-so-good news -- it generally doesn't get announced in a press release. Sometimes it's there, but it probably won't be near the top. I got to thinking recently about the ways companies avoid discussing negative things or try to show them in a favorable light. And I decided to hunt for a few examples and put together a very unscientific survey.
I picked a few companies and looked up some of their recent press releases. I started with JetBlueAirways and clicked on the first quarterly earnings announcement I saw. Surprisingly, the company put its troubles front and center, leading with its rising losses. Near the top, it noted: "'We are disappointed to report our second consecutive quarterly loss,' said David Neeleman, JetBlue's Chairman and CEO. 'As we face what might be the 'new normal' for fuel prices, we have developed a comprehensive 'Return to Profitability' plan that includes right-sizing capacity, revenue enhancements, and cost reductions."
Next, I tried Apollo Group
Then I was off to the Avon Products
Don't write them off
When you see a company struggling and you find red flags and areas of concern in its earnings reports and other communications, you shouldn't necessarily move on. Some of these companies are in the midst of a long slide to oblivion, it's true. But some others will prove to be smart buys as they get their acts together and remedy their problems.
Finding solid companies turning themselves around is one of the goals of our Motley Fool Inside Value newsletter, which is headed by Philip Durell. You can take advantage of a free trial of it to access all past issues and see for yourself, but in the meantime, permit me to point out that Philip singled out Intuit
Here are some Fool articles on some of the companies I've touched on:
- A Facelift for Avon?
- Avon's No Diamond in the Rough
- Sell, Dell, Sell!
- Dell's Still a Dog
- JetBlue Lands on Red
You can serve yourself best by reading company communications carefully and critically. A company may be 100% truthful in its press release, but it may still be avoiding shedding light on some problems. As you note the information that the company is providing, note also what it's not providing. Many companies, for example, don't provide all of the financial statements you'd want to see. Back in 2001, we lambasted Enron for not even providing balance sheets.
Read between the lines, as well as what's in the lines.
JetBlue is a Motley Fool Stock Advisor selection, and Dell does double duty as a Stock Advisor and Inside Value pick.
SelenaMaranjian's favorite discussion boards include Book Club, Eclectic Library, Television Banter, and Card & Board Games. She owns shares of Dell. For more about Selena, viewher bio and her profile. You might also be interested in these books she has written or co-written:The Motley Fool Money GuideandThe Motley Fool Investment Guide for Teens. The Motley Fool is Fools writing for Fools.