Misreading American Express Earnings

| About: American Express (AXP)

Come on people (and I don't mean you, my very intelligent readers but all those sheep selling American Express this afternoon) read the article, not just the headline!!!

Here is the fundamental problem with Google Finance, they return the same AP article (or whatever service) as it is published in 100 different papers vs. Yahoo, who actually has human beings edit the content for relevance.

So When I put in AXP under Google Finance I see A-H headlines where A,B,C,D,F and G are the exact same AP article with the headline "American Express 2Q profit falls." (note that by the time you click on this the page may have changed significantly).

The article says that Amex profit fell nearly 7 percent in the second quarter, reflecting the spinoff last year of its Ameriprise Financial unit, but it doesn't mention that Ameriprise represented 16% of the profits last year.

Further down the article it does say that profits from continuing operations rose to $972M from $860M, but nowhere in the article does it mention that last year also included a tax benefit of $87M, while this quarter includes an unusual write off of $62M worth of Reward Program redemptions. In fact, last year also included $113M of 9/11 insurance claims paid to the company but I'm even willing to let that one slide as this quarter included a gain on the sale of Brazilian operations so I'm willing to say that it's always something.

But what we really have here is a Q2 '05 that was actually $620M (removing Amerprise and the tax bonus) vs. a Q2 '06 of $1,034 (adding back the reward write off). One trend we can expect to continue is the company's 17% decline in loss provisions as the change in bankruptcy laws mean collections will be up up up!

I grabbed both the $50 calls for $1.20 and the $52.50s for .25 as the stock dropped below $50 and I eagerly await tonight's conference call where the execs can slap these silly traders around, but they have only themselves to blame if they can't take an extra 5 minutes to read the full press release instead of relying on the headlines.

Also, I find it very interesting that American Express is reporting strong card usage as Amex is generally not a "credit" card per se and has to be paid off each month. Seems to me the consumer may not be quite as on the ropes as they would have us believe...

Travel was the only business segment that posted a decline and that may be a reflection on global tensions as much as it is consumer tightening.

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