Since we're talking about legal issues here, what do you guys think of this (I orginally posted this under the MSFT vs. NSCP thread):
ALL: Has anyone ever thought of filing a lawsuit against companies that
PREANNOUNCE lower-than-expected earnings?
First of all, that's never happened to me (because I basically invest only in high-growth
companies which I know are actually going to report growth!). But if it did, I know I'd
be very upset.
The reason I'd be angry, is because it isn't fair to us as investors. I mean, what
difference does it make if a company warns of lower than expected earnings 3 weeks
before the actual announcement? It makes no difference whatsoever when the news
comes out--either way, the stock will get crushed.
My complaint, is that since the stock will basically get slammed either way, why do
companies see fit to preannounce?
The only purpose it serves, is to surprise investors with an announcement that they
aren't expecting for a few more weeks. If the company says that they will report
earnings on October 20, that means that I, as an investor/trader, will be sure to take
proper trading action BEFORE the announcment. Meaning, that if I was worried about
the earnings release on October 20, I would sell my shares BEFORE October 20. It
isn't fair that I get blind-sided like that, especially since the SEC is there to help protect
investors.
These preannouncments are only catching investor off-guard, when they least expect it.
You'd think the SEC would say something about it--In fact, I'm going to call them
tommorrow.
Any comments?
Sal Habash |
