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MARKET COMMENT
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Success has a thousand fathers, but failure is an orphan. The old adage is so appropriate for managers of listed companies. Those fluent in directorspeak, that peculiar buzzword-based dialect spoken only within corporate boardrooms, often lose their tongues when problems arise. For instance, during the past twelve months, no less than 154 company results trumpeted the phrase our success. But how many result statements owned up to our failure? Only one, the interim update from Betinternet.com (LSE: BET): 'The Scandinavian operations of Oddsalive.com have been fully absorbed within betinternet. The number of active customers wagering and the region's profitability have been materially below expectation, and have been a major contributory reason for our failure to absorb overheads in the first half.' The term we failed brings up just another two admissions, found within the annual figures of Premiership laggards Tottenham Hotspur (LSE: TTNM) and the six-month statement from oil group Sibir Energy (LSE: SBE). Although the last year has seen the term we were successful crop up in 24 company results statements, we were not successful was located solely in the preliminary results of recruiter Reed Executive (LSE: RDX). In addition, we were unsuccessful was used only by IT specialist LogicaCMG (LSE: LOG) in its full-year update and transport group GB Railways (LSE: GB) in its preliminary statement. And what about boardrooms using some other admission of failure? Our fault? None. Our error? None. Our lack of judgement? None. The word mistake, however, is a slightly more popular word in directorspeak. Even so, the boards at pub group Eldridge, Pope & Co (LSE: ELD), dotcom investor New Media Spark (LSE: NMS), football team Sunderland (LSE: SUA) and mineral extractor Ramco Energy are the only four to have used it in the past twelve months. The upshot from all of this? Chairmen and chief executives almost always emphasise the positive and play down the negative. Investors therefore ought to treat company statements as a bit of a public relations exercise and should be cautious of excessive 'spin'. Although not perfect, it's the accounts in the back of an annual report that will give a much clearer indication of a firm's progress. Where next? What Company Directors Don't Tell You