Q&A Part II: Interview with Michael Rapoport

Q3. How do you look up statistics for companies? Which sources do you think are most reliable?

A: The SEC filings are the most reliable sources, and they're available through the EDGAR system at the SEC's website, sec.gov. These are the equivalent of sworn statements that the company's CEO and CFO have to certify are accurate - if they're found to have knowingly put false information in the filings, the SEC can sue them for filing false statements.

What used to happen, before the Enron scandal, was that many companies would, not outright lie, but skew things in their favor by reporting what they called "pro forma" earnings - their own measurement of their results, stripping out anything they wanted to. So they would say, for instance, "Our earnings for the quarter were 20 cents a share, but without bad things A, B and C, they would have been 50 cents a share, and we think that's the important figure." They ignored the fact that they couldn't simply wish away A, B and C, or treat them as unimportant. Because of Enron and the other accounting scandals, and because of the Sarbanes-Oxley securities-reform law and the regulations passed in association with it, companies have to be clearer in their press releases; they have to acknowledge when they're using measurements of earnings that aren't in accordance with accounting standards - known as generally accepted accounting principles, or GAAP - and show how those measurements are reconciled to GAAP measurements.

Q4. How do you build your network? How do you stay in touch with your sources?

A: In the course of covering a beat regularly, and writing stories about that beat regularly, you're going to come into contact with people who are useful as sources - officials of the companies you're covering; major investors in those companies; representatives of other constituencies who have an interest in those companies, like labor unions or regulators; outside experts who have an interest in those companies or that industry, like academics and think tanks; and many others.

Any of those people who are in a position to know about things worth covering on that beat, or who can provide valuable perspective on issues and stories that come up on that beat, it's worth your while to cultivate. Even people with an ax to grind, like the analysts working for investment banks, can be useful, so long as you remember that they may have a bias. Call your sources every now and then to talk about what's happening on the beat; send them stories or other information you think would interest them (only publicly available information, of course); and when you include them in a story, send them a copy of the story.

In terms of professional PR people, they're official representatives of the company, and they're usually not going to give you a scoop on something that the company isn't ready to announce. But good PR people will work with you to get you the information you want for your story, even when that story isn't going to be favorable to the company. They have a job to do, in representing the company's point of view, but they'll recognize that you have a job to do too.

To be continued...