Sick and Tired of Financials, Carmakers Blaming Everyone but Themselves

I have to say that I'm sick and bloody tired of companies blaming the economy, the credit crunch, the weather, currency imbalances, paycheck cycles, the Easter Bunny, and everyone else for their troubles, when the truth is usually that they made a few mistakes, mismanaged things, or are just bloody incompetent.

Detroit will blame the Yen's valuation for their problems when they've become the low cost provider, and many Japanese cars are made in the U.S and are sold for higher prices.

The financial sector will blame the housing crisis and credit crunch for their problems despite the fact that they are one of the root causes behind both; it's analogous to setting your house on fire and blaming the fire for making you homeless. The other issue is that blaming the credit crunch and housing crisis for their issues effectively says: "well, uh, we can only make money if we lend money to anyone with a pulse and have a bubble to artificially inflate our profits".

That's the other aspect of companies trotting out weak excuses for bad performance - they don't stop and think about the fact that they're basically admitting they have lot's of problems that were just covered up when the operating environment was healthier.

Overall I have to say that it's probably not the worst idea in the world to heavily scrutinize any company that trots out weak excuses instead of just admitting what their real problems are; there is a reason that candor and honesty with investors is one of the criteria Warren Buffett uses to evaluate a company.

Disclosure: At the time of publishing, the author didn't own a position in any of the companies mentioned in this article.

Comments

[redbaron:]

Are there any recommendations or suggestions here? Nice thoughts, but I could get that from a poetry book.

2008 Aug 22 08:28 AM

[mycargets52mpg:]

It is widely known that the Great Pumpkin is to blame. Its appearance coincides with the new model year which is about to fall flat on its nose, again.

2008 Aug 22 10:11 AM

[Miken:]

I think the problem is analysts who couldn't hit the water if they fell out of a boat. A management consultant is someone who couldn't make it as an analyst.

Take a company like GM. WHen GM stopped giving guidance, the analysts didn't have a clue. I don't think most of them can read a financial statement, but yet that doesn't stop them from pontificating.

2008 Aug 22 11:16 AM

[Mister Jimmy:]

Thankfully, this useless article was a short one. Where in God's name does Seeking Alpha get know-nothings like this ranting fool?

2008 Aug 22 12:19 PM

[IXLR8:]

I suppose that the author of this drivel has insurance policies to protect him financially when he does something bloody incompetent like driving into a tree or falling off a ladder while cleaning leaves from his gutters.

Can any fool get a job here writing columns?

2008 Aug 22 06:59 PM

[Markham Lee:]

I think the markets and the analysts look for a sign from the company that things will improve, and they more or less make "bets" that the rest of the market will buy what management is selling.

After an abysmal Q3 of '07 (A big loss, negative revenue) Countrywide claimed that they would return to profitability the following quarter, and the stock popped significantly even though there was zero reason to believe that.

Every time a retail company misses its numbers it always has an excuse: the weather, paycheck cycles, etc, and many times the media and the analysts buy it.

It's sort of a weird con game where the mark asks for it.

It won't stop until investors start holding management accountable and/or calling BS more often.

2008 Aug 22 08:54 PM