First of all, I am not advocating suing ANY company because they failed to have a good quarter. A legal debate doesn't solve a company's problems, or the fact that I investing in it. Personally, I think companies should not be held liable to lawsuits based upon their performance (assuming that the company did nothing illegal or misleading). As such, if I was in Californina, I would strongly vote against 211.
The debate I'm trying to spark here, is exactly what I got you to say: That lawsuits against companies that fail to do well in a given quarter are ludicrous.
I'm taking this point further, though. Why do companies make preannouncements? PREANNOUNCEMENTS ARE ACTUALLY USED BY THE COMPANY IN ORDER TO ***PREVENT*** LAWSUITS BASED UPON THEIR POOR PERFORMANCE.
What is the logic behind this??? To me, this is ironic, and is what I don't understand, and what I'd like to discuss. Why is it, that a company can not be sued if they preannounce a bad quarter? And why is it, that they can be sued if they don't preannounce a bad quarter? I don't understand the timing issue here. Why is it OK to release negative news before the specific EPS date, when no one is ready for it; but it is not OK to release negative news on the specific EPS date, when everyone is waiting for it?
It seems to me, that things should be the other way around, simply because preannouncements catch investors by surprise.
Sal Habash
P.S. I'm not the kind to bother causing trouble for companies which I chose to invest in upon my own free will. I just want to queston what has become standard operating procedure in the stock market. It just seems like everyone has accepted the reality of preannouncements, without bothering to question the logic behind it. I hate just accepting things for what they are, simply because I'm told to. |
