I heard back from briefing.com, also; here's a reply that I sent to their letter. I share it here because the problem of estimates and charges is a fairly common issue, and I wasn't entirely satisfied with their take on the issue. We need to educate ourselves and the media on this issue, to the degree that it's possible, because our money is ultimately at stake.
I should note that I do very much like their assessment that the market shouldn't have such strong "knee-jerk" reactions to beating or missing estimates. But, of course, the fact is that the market does react strongly to these comparisons, and therefore it's incumbent on journalists to appreciate this and do everything in their power to report these numbers accurately and in their proper context.
Briefing.com's message:
Well - it depends. The "charge" is for losses as they are incurred. We are going to provide more analysis of this, but it is an example of where there is a lot of grey, not black and white. And where the market should learn not to kneejerk react to "beat" or "miss." This has to be understood and looked at. They really did lose 9 cents.
My response:
Yes, of course they really lost the money. But the relevant measure for investors is the company's performance relative to earnings estimates. And, on that basis, BKS beat estimates by 0.03 -- which is a far cry from missing by 0.04, as you reported this morning.
The problem, obviously, is that earnings estimates should take these "charges" into account. First Call should have estimated (0.12), which would then show BKS's (0.09) as an upside surprise of 0.03. The use of these charges is ridiculous and fraudulent; I agree with Warren Buffett on this. But, until someone decides to do something about it (the companies, the SEC?), we're stuck with this misleading way of doing business.
I'd like to see the correction you posted this afternoon state that BKS beat estimates by 0.03, in order to offset your earlier report that BKS missed estimates by 0.04.
I appreciate your response and realize that this is an extremely tricks issue for journalists, analysts, investors, etc., etc.
Thank you,
Lane Hall-Witt |
