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Technology Stocks : Wind River going up, up, up!
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To: william binder who wrote (1791)8/21/1997 11:02:00 PM
From: Allen Benn   of 10309
 
>The earnings that were reported were slightly above consensus.
>Does anyone know the whisper #?

WIND is the only company I know that is trying to do something intelligent about earnings estimates and so-called whisper numbers. There were no whisper numbers. None.

All four analysts had the identical estimate of 12 cents. It was public knowledge that the estimate would be met and slightly beat. From inspection of the last few quarters, it is obvious that "little bit extra" equals exactly two cents, yielding 14 cents total. (The only way earnings could have differed from 14 cents would be due to a surprise round-off error.)

Now we know. Each quarter, the analyst estimates will be met with two cents to spare. No reason for the market to fixate on the earnings report, since the result will be known well in advance. Instead, the market should stay tuned to strategic developments, knowing that the stock will not be undercut by a missed quarter.

To long term investors, this is good news, since you can relax going into critical earnings report times. No surprises means there is little risk that the stock will suddenly tank because of a slightly flawed quarter when compared to expectations, or rumored whisper numbers.

This does not mean that the stock will not be volatile, once the market accepts this procedure. It only means that the stock will not be particularly volatile when earnings are reported, the most vulnerable time for stock prices.

Allen
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