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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Chuzzlewit who wrote (12325)2/21/1998 1:33:00 PM
From: Broken_Clock  Read Replies (2) of 95453
 
Paul, re: analysts

I know a CEO of a nice sized tech company(on Fortune's Top 500 Fastest Growing list). He is a good friend of my wife. I had an interesting conversation with him regarding earnings, analysts, etc.

Bottom line....He learned the hard way that to succeed in keeping your stock in line with market valuations then you had better meet or exceed the consensus. They spend well over $1,000,000/yr just with specialists in the accounting Dept. in order to do just that. The analysts don't seem to care whether the company is sound or not ....the focus is on the meet or beat #s. He missed by 1 cent a couple years ago and the stock went from 42 to 12 in 2 weeks.The company is bigger, less debt, did acretive aquisitions and has met or exceeded #s every quarter since the penny miss. They are back up to the mid 20s but it's hard to erase the perception in the minds of the analysts that was created by the one miss. That has cost the company at least 1 billion in stock value which could have been used for further aquisitions.

His perception is that it's a game and the company will do everything it can to win. The analysts are happy cause they always look good when the company meets or beats which gives them job security.

Interesting and true story.

PK
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