It’s a bit surprising when the financial statements of companies become the subject of spin.
Here you are, CEO of a top ten semi company, and your Q1 figures are 10% down sequentially when the market grew 2% +. What do you do?
Well you call up your PR and get her to issue a results release which compares your Q1 with a quarter that was even worse – and announce . . . . growth!
2010 was a 32% industry growth year. If you didn’t grow in 2010 you’d cut back on capacity too much, you’d cut back on product development too much, you’d developed the wrong products or your mismanagement was epic.
ST Microelectronics had Q1 2011 sales down 10.5% on Q4 2010.
But the company’s Q1 results announcement highlighted the comparison between Q1 2011 and Q1 2010 which showed a sales increase of 9% – which was not actually a particularly good result during the industry’s best 12 months in a decade.
As for ST’s operating profits in Q1 2011 – they fell 40% from the $245m of Q4 2010 to $142m in Q1 2011.
While ST’s net profit slumped from the $219m of Q4 2010 to $170m in Q1 2011.
But the press release highlighted the Q1 2010 to Q1 2011 increase which went from $57m to $170m.
Unfortunately, a lot of the commentators are too lazy, craven or stupid to do anything else than print the release as is.
This is a very bad trend.