The Problem with Specialty Publishers

The technology industry, like every industry, has a group of publishers serving it.  These specialty publishers are facing even more pressure than the publishing industry overall and it is showing in the quality of their reporting -- particularly when they are reporting on their advertisers.  Take this example from Channel Insider yesterday:

The Story:  

Starting with the headline: "Tech Data's Recession 2009 Strategy Pays Off" Jessica Davis quotes Tech Data's CEO Bob Dutkowsky as saying the company's fourth quarter was exceptional.  She goes on to paint a picture of Tech Data just as Tech Data presented themselves to her.  The main points:  Tech Data's revenue was up in a down market; Tech Data's profits were up; Tech Data walked away from undesirable business.  From the article you gotta think that this Bob Dutowsky is one amazing CEO.

The Rest of the Story:

So let's dig into the numbers a bit. Q4 Revenue:  As reported in Channel Insider, Tech Data's Q4 revenue was great:  $6.28B vs. $5.71 -- and increase of 10% over the previous year. The other three quarters were all down 18%, 16%, and 8% for a total of the year including the killer Q4 of DOWN 8%.  The article says revenue was UP 8.2% even when accurately stating the revenue figures.  I take this as an indication of just how far the author was swept away by the press release, and the fact that no one else read the article before it was posted.  The rest of the industry was down 1.8%.  Ingram Micro (IM) was down 14% and Synnex (SNX) was down 1%.  So Tech Data is doing better than some, worse than others, and worse than the industry.  To their credit, they did pull out some pretty good net income in a tough environment.  

It appears that the investment community looked at the data instead of taking Channel Insider's reporting at face value because the stock fell about $3 on the earnings announcement on 3/2. Eric Savitz at Barrons on 3/2/2010: "Tech Data: Q4 Beats; But Stk Slides As Q1 Outlook Disappoints"

If these publications are going to survive a good place to start would be better reporting.