Consumer Electronics: Don’t Believe the Hype

**This is a guest post from Lee Distad, an Edmonton, Alberta based custom channel business consultant. His freelance media work covers topics from CE to global business to finance in both print and online.**

I asked Lee to write a post on this topic given his extensive consumer electronics expertise. Neither he nor Stone Street Advisors has any position in the firms not mentioned in this article. I think this is an incredibly valuable perspective from an industry professional with considerable experience that many bulls and bears should take to heart.

–Jordan S. Terry

Don’t Believe The Hype

I’m just going to say it: Basing your investment decisions on press releases is a bad investment strategy. Yet some of the more vocal stock boosters point to press releases as validation for their position.
Nowhere was that more evident than last month on the comments section chatter on both technology and investing sites in the wake of CES.

The typical bull comment for why such-and-such a tech company is a good investment falls back on the same argument/observation: “Oh, they were getting huge buzz at CES!”

I’ve got news for you: Getting “Buzz” at CES is a leading indicator of only one thing: That the PR flacks that brand hired are worth the money they’re getting paid.

It doesn’t mean anything else.

I say that with the full confidence of my experience wading through press releases, trying to find something actually newsworthy Read (or even skim) enough tech sector press releases and you will feel like you’re drinking from a fire hose that shoots superlative adjectives. According to the breathless, hyperactive folks who write shot-out-of-a-cannon press releases every company is “Best In Class” or “Industry-Leading” and every technology is “Groundbreaking” and “Innovative.”

At least, the company that’s paying for this media exposure is, anyway.

And CES is the annual epicentre of hype in the technology channels. It’s the biggest and loudest dog and pony show of the year. With such a cacophonous noise to signal ratio, brands pay extra for their PR flacks to shout their praises louder than anyone else’s. Nobody at CES, especially the press, care about where things are made, or by whom, or what the overall strategic impact will be. All anyone cares about is that something is shiny, new, and cool looking.

You cannot predict future success based on media hype.

If that were true, Blu-ray market penetration wouldn’t be so humiliatingly low, and 3DTV would demonstrably be a commercial success.

I could go on all day, so let me just leave you with this: reading press releases is NOT due diligence.

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About Jordan S. Terry

Founder & Managing Director, Stone Street Advisors LLC. Investment research and consulting for institutions, funds, family offices, wealthy individuals. Long/Short fundamental, value-oriented ideas with the occasional special situation throw in for good measure.

4 thoughts on “Consumer Electronics: Don’t Believe the Hype

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