Business Blog - Martin Flanagan

Published on Friday 5 September 2008 13:18

YOU can have too much of a good thing, can't you? We're now reaching that point with business trading updates. Might seem a strange thing for a business reporter to say, but information overload is setting in.

And the weird thing for share prices is that so constant is the stream of company 'updates' that each supposedly 'new' bit of information has often already been priced in so that stocks frequently hardly move on it.

Reflect. A typical mid-sized company now has a pre-close trading update, with the key sales figures and guidance on likely profits performance a couple of months or so before the annual results.

This increasingly steals the thunder of the annual results themselves when they come out. From being the star of the show, annual results now quite regularly just seem to fulfil foreshadowed expectations.

A further update on 'current trading' comes some weeks later with the AGM statement. So far, so sane.

Then before you know it there is the next pre-close update due ahead of the next interim results. Then come the interim results themselves: again now with a much reduced possibility to shock or agreeably surprise investors.

Some companies are increasingly bunging in an interim management statement (a trading update in all but name) as well.

And, of course, when a major FTSE 100 company has a significant US business, such as, say, the oil giants or some technology groups, you get four quarterly results statements.

As with most excess information,, a law of diminishing returns sets in. If numbers and updates are constantly being put before you they tend to lose their importance. Investors can be forgiven for not seeing the wood for the forest of figures.

One can get the feeling you are seeing more of some companies than you are of your family and friends.

In some ways, even if unintentionally, it can also resemble the double-accounting New Labour has often been accused of in government.

Putting out 'good news' announcements that are in fact a repeat of previously announced initiatives.

Nobody would argue for business to go back to a dark age of being cavalier and too sparse in their updates to the market.

Transparency is patently a good thing. But one wonders now whether the pendulum has swung slightly too far for its own good in company numbers-reporting.

It is not in the interest of business readers or investors to be blown away in a storm of what can essentially become retread information.