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Mix-Ansicht- FLOTSAM AND JETSAM: THE BIG FAT EARNINGS LIE - BossCube, 07.08.2001, 19:19
FLOTSAM AND JETSAM: THE BIG FAT EARNINGS LIE
- From The DR Blue's Dan Denning
"... Notice how companies always exceed expectations by
a penny? Is that just excellent guidance and good work
by the analysts? Or is it a concerted effort to manage
the price of the stock by carefully manipulating
earnings growth so it's viewed as positively as possible
by the stock buying public? Don't answer that yet...
(Diesen Verdacht hatten wir ja auch schon, daß die Gewinn hinmanipuliert wurden. )
...fact is, analysts have a less than stellar track
record at successfully evaluating a business' reasonable
rate of long term growth. How many analysts predicted
that JDS Uniphase would lose $500 million dollars and
$.30 a share in July? And that they would then write off
$45 billion in bad investments? None.
In the prior three quarters JDSU, had exceeded analyst's
expectations twice (by a penny once and by two pennies),
and met them once.
What about Lucent? It announced it lost $1.2 billion in
its most recent quarterly report. It ended up losing
$.35 a share. Meanwhile, analysts had projected Lucent
to lose only $.21 a share. They missed by 66%. And
that's after under-projecting Lucent's previous
quarter's loss by 60%.
Again, just bad work by the analysts? Or were they
working with Lucent to try and limit the amount of bad
earnings news that could drive the stock down? Hmmm...
You can't predict the future down to the last penny. No
matter how good your models and projections are, the
marketplace changes, especially in technology, where it
changes faster than anywhere else.
The earnings game is a racket played by Wall Street. It
generates meaningless content for the knuckleheads on
CNBC.
If you want a better measure of what a company is worth
in cold hard cash, then look at cold hard cash. Or
better yet, look at dividends..."
Bon Weekend,
Addison Wiggin,
The Daily Reckoning
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