Tim Carmody of Wired writes Wednesday about the games that are played on tech reporters in an attempt to influence company stock prices.
Carmody writes, “This isn’t just about the things we usually worry about, like companies’ PR reps hustling for favorable coverage, or high-profile Arrington-at-Techcrunch conflicts of interest. The tech world is filled with interested parties trying to place stories in order to move the needle on a stock price up or down so they can pocket the difference.
“One recent example is the acquisition rumors swirling around Yahoo. I actually stopped reporting on these, except to make fun of them.
“A recent post from Business Insider’s Henry Blodget spells out these shenanigans pretty plainly. Blodget argues that the Wall Street Journal’s reporting on Yahoo, including a potential partial acquisition by Microsoft, is primarily driven by private equity firms involved in the acquisition who’d like to drive the purchase price down below $16 a share. In turn, Blodget, a Yahoo shareholder and employee and former Wall Street analyst, offers up his own blog as a mouthpiece for Yahoo shareholders (including himself and his sources) who’d like to hold out for a higher price. Yay journalism?
“One reason mergers & acquisitions rumors are particularly crazy — Hulu was another example that gave plenty of journalists bottomless copy until finally nothing happened — is because there are just too many parties involved with competing interests who have good reason to use information for their own purposes. I’m not saying journalists shouldn’t go with the information they dig up, but readers should think hard about how much they want to believe.”
Read more here.
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