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Technology Stocks : InfoSpace (INSP): Where GNET went! -- Ignore unavailable to you. Want to Upgrade?

To: rampingup who wrote (18160)	4/6/2000 1:35:00 PM
From: Greg S.	Read Replies (3) \| Respond to of 28311

Man, don't you get it..If this someone puts out a number like .24 then they protect their short position from a upside surprise. Even if someone thought that .24 was a realistic number, it puts the stock in a no win position. Let's say we do .20 double real expectations. oh man they missed the whisper, well we better sell on that news. The whole thing is a big joke..and the joke is on company..because any upside surprise should be just that a surprise. Earnings in all forms get factored into the stock price - whether they are past profits, earnings projected 5 years from now, level of earnings growth, or magnitude of earnings surprises. There's been a lot of hooplah about whisper numbers lately - but I think if you do some research you'll find that they actually have little to no effect on the stock price and are merely a side effect of new valuation methods. Companies that have a long history of beating expectations are priced accordingly. When a company issues surprise earnings for the first time, it goes up not just because it made more money, but because it appears to be growing faster than everyone expects it to, and this gets priced into the stock. After 8-10 quarters of good "surprises", it becomes expected - why shouldn't it be? - and becomes a characteristic of the stock, e.g. this is a company that is growing so fast it continually beats Wall St.'s expectations. Many people like to invest in those types of companies. I sure do. Whisper numbers or no, failing to beat earnings estimated by a large enough margin could cause a drop in price because it dispels the above perception of the company. This condition is the fault of the analysts and the company not developing an accurate portrayal of their earnings growth. This market has for the last few years been anything but predictable, so it's understandable. But what if nobody ever beat estimates? Prices might still be the same, because the estimates would be a lot higher. It is not a conspiracy by shorts to cover their butts, it is a side effect of the market. If everyone actually believed the number was 0.24, we would see a significantly greater runup toward earnings - what does a short have to gain from that? Speculation on the company changes daily and causes volatility - the fundamentals of the company are what drive the price. I just wish they knew how to drive faster. :) -G