John,
If specific guidance is given, it should be disclosed to all. That said, it is hard to police this activity unless the analyst's rationale makes it clear that the numbers are coming straight from mgt in unadulterated form. As you know, most earnings estimates are derived from estimates of various line items, some with mgt guidance, others from the analysts expectations re various factors of market growth, success of new products, etc. I doubt the MRVC has any idea what next year will look like given that the acceptance of a new product cycle, which is now delayed, will determine their fate.
I suspect that in these situations of tremendous uncertainty, analysts look at best case and worst case assumptions for the product acceptance and other variables, and pull a weight average out of their hat based somewhat on gut. Projections are only as good as the assumptions. If the product cycle is further delayed or does not go well, the projections will go down accordingly as we move on. The converse is true, and when that occurs, the stock price will be driven upward accordingly.
Risks are high here. The tech landscape is littered with permanently beaten down companies whose demise began with "its only a one quarter product cycle transition issue." This explains the severe reaction to MRVC's announcement. The product delays are not always solely due to internal execution (not a good sign either), but due to competing products surpassing a company's new products even before they are released, meaning back to more product development before release. Not a good sign. I have no opinion whether that is the case here. |
