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Technology Stocks : Dell Technologies Inc.
DELL 125.36+5.0%10:42 AM EST
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To: Voltaire who wrote (82939)11/30/1998 6:10:00 PM
From: Chuzzlewit  Read Replies (1) of 176387
 
Voltaire, re: Do you honestly think all of these companies really are beating estimates by a penny?

No, of course not. What these companies are doing for the most part is trying to manage expectations with a little creative bookkeeping thrown in. The fact is that the vast bulk of analysts out there couldn't analyze their way out of a paper bag. [Witness Kumar's nonsense on Dell's "shortfall" in desktop growth! I published a simple refutation of his "analysis" few weeks ago] These people are receiving what is euphemistically called "guidance", where the CEO or CFO gets these clowns on the phone and tells them what to forecast. Since they know that stockholders are happiest when they are pleasantly surprised, management sets the "forecast" to an easily met number.

Now here's the tricky part. Since everybody knows this game goes on, investors try to second guess management in order to see what slop (i.e., earnings "surprise") has been built into the forecast.

I never characterized your suggestion as stupid. Ill-considered might be a better term. There is nothing wrong with investors suggesting was for a business to improve operations. I do, however, think it is ill-considered to encourage management to "manage" their earnings.

TTFN,
CTC
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