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The figures from Arm Holdings looked disappointing: sales down 8%, profits down 2%. Sure enough, the shares were 1% lower within an hour of trading after the results were released.

Yet by the end of the morning Arm shares were up more than 1% because investors started to look beyond the figures that had been prominently displayed high in the stock market announcement.

Arm supplies semiconductors with its own programs on them for industries such as mobile phones. The admittedly weak results had been achieved in the teeth of a recession. But, as the company went on to point out, it had in fact gained market share, ameliorating the effect of the downturn by taking business from its rivals.

The wording of company announcements presents different challenges for investors and City professionals. For law firms and financial advisers, the priority is to see that the requirements of UK and European law are complied with alongside London Stock Exchange and Takeover Panel rules; for financial public relations advisers and each company’s in-house PR experts, the priority is to put the best gloss on the situation; while for investors the desire is to cut through the jargon and get to the nitty gritty.

It is true that many companies litter their announcements with meaningless phrases such as ‘challenging trading conditions’ and ‘in line with internal company expectations’ but they also include all the information needed to invest in the stock market, served up on a plate for those who know where to look and how to interpret the information. This information is published, within fairly narrow limits, at known times, so it is only in unexpected circumstances (such as a takeover bid) that stock market followers should ever be caught out.

By keeping fully informed, all investors can buy and sell shares with confidence, knowing that they have made an informed judgement. By knowing what investors need, company advisers can provide a better service.

Rodney Hobson

October 2009