Zo, what do you think are the chances that CSCO will report
increased penetration into the carrier/provider space
as opposed to their bread and butter enterprise sector?
I personally don't think they will because if they had
any news, they are so thirsty to get into that space that
I think they would have announced something by now.
Also I think some analysts may know something more about this
which may also explain some of CSCO's recent weakness.
Barron's recently was commenting about the fact that the
SEC recently is proposing a heretical rule!! Hear ye hear ye!!
ie that Joe-Blow-little-shareholder be given the same
Company inside info that the Big Analysts with the
selective clientele ( read: " the anointed " ),
are currently given by various companies.
interactive.wsj.com
Of course that takes us back 300 years to ...The ....French
Revolution..........; another heresy::::::::::
Liberte' ,Egalite' , fraternite'
landow.stg.brown.edu
Darn it,...all these bothersome little people that
pretend to want to be our equals.......How dare
they..........
TA
------------------
interactive.wsj.com
Much Ado
Is the SEC's proposal the death of research or a new dawn for small investors?
By Bill Alpert
Maybe you thought Wall Street research was ruined by its thirst for underwriting fees. The Street wants you to know who's really out to kill investment research. It's the SEC. That's the industry view of the Securities & Exchange Commission's attempt to end the perverse game of "selective disclosure," in which companies leak information to friendly or powerful Wall Street analysts before announcing the news to the world at large. Shortly before April 28, when the public comment period on the proposed Regulation FD ended, the Securities Industry Association and the Association for Investment Management & Research weighed in with volumes of criticism.
As an unintended consequence of the SEC proposal, claim those industry groups, public companies will end all private encounters with investors, reporters and rating organizations like Moody's. In one-on-one conversations with corporate brass, they moan, analysts will have to talk about the weather.
In contrast, most of the 3,000 comments filed by small investors applaud Reg FD as a playing-field leveler. While a comment by this magazine's publisher, Dow Jones, favors excluding disclosures to the "bona fide" press.
There's no question that Reg FD addresses a serious problem. Last year, for example, Abercrombie & Fitch admitted that the SEC was investigating allegations that the clothier had tipped an analyst about weak third-quarter sales, five days before telling the public. And rumors have long circulated about mutual-fund complexes that use their big positions in small stocks to pressure management into opening up.
For more than two years, SEC Chairman Arthur Levitt has used his bully pulpit to rail against two-tier disclosure that gives fat-cat analysts a leg up on the news. But the antifraud basis of insider trading law offered no obvious remedy for the problem, says Harvey Goldschmid, who returned to his professorship at the Columbia University School of Law in January after serving as SEC general counsel. The rule set by the U.S. Supreme Court in a 1983 case, (involving analyst Raymond Dirks), forbids insiders from giving stock tips in exchange for personal gain.
Yet public company executives who feed tips to favored analysts may curry favor for their companies without direct gain for themselves. The SEC would therefore have a hard time finding a selective disclosure case to prosecute as fraud, says Goldschmid.
But while the agency lacks direct power over analysts, it does hold sway over public companies. So the Reg FD proposal cleverly addresses this group. In spare language, the rule says that a company that intends to disclose crucial information to selected investors must simultaneously release that information publicly. If the company learns of a non-intentional selective disclosure, it must promptly share that information with the public. To sanction violators the SEC might suspend stock sales by a corporation or its insiders. Corporate lawyers could also face discipline.
Those lawyers feel picked-on. "Regulation FD places all of the burden of compliance and the attendant liability for non-compliance upon issuers," bawls the American Corporate Counsel Association in its comment, "and does not address the analyst community in any meaningful way."
The onus of avoiding selective disclosure, under the language of the rule, would fall on a person acting on behalf of an issuer. That would mean company employees and agents authorized to speak to the media or investors, said the SEC in its December 15 presentation of the proposal. But those terms could include a raft of employees who occasionally talk to outsiders, wrote Richard M. Starr, managing counsel at American Express, in his April 27 comment on behalf of the corporate counsel association.
That might seem a problem for intrepid analysts and journalists who look high and low in search of data-visiting trade shows, medical meetings and software user groups. In the Dirks decision, the Supreme Court explicitly lauded investors who take the initiative to "ferret out and analyze information."
"If I go into a store and the store manager says red sweaters are not selling, is that illegal?" worries Kenneth Londoner, whose Red Coat Capital has a reputation for making exhaustive retail checks. An amateur investor -- say a retired doctor in Dubuque -- could gather similar information if he made the effort.
The Securities Industry Association and the Association for Investment Management & Research vigorously oppose Reg FD, claiming that it will curtail investor contacts with a public company's mid- and ground-level employees. SEC officials argue that Reg FD's terms don't threaten conversations with rank-and-file employees. Such employees, says the SEC's general counsel, David Becker, don't typically possess information that is "material" -- the SEC's term for price-sensitive information, a term that the industry slams as ill-defined.
Becker said the proposal shouldn't inhibit investors who go beyond a company's official statements to assemble a mosaic of data. If someone's legitimate work and skill enables him to put two and two together to get four, says Becker, Reg FD should pose no obstacle, even if "four" is material.
Unintended Consequences?
The proposed regulation below, which is meant to democratize financial information, has folks in the securities industry huffing and puffing that it could spell the death of research.
Whenever:
(1) an issuer, or any person acting on its behalf,
(2) discloses material nonpublic information
(3) to any other person outside the issuer,
(4) the issuer must
(a) simultaneously (for international disclosures), or
(b) "promptly" (for non-intentional disclosures)
(5) make public disclosure of that same information.
But Stuart Kaswell, general counsel for the Securities Industry Association, worries that the SEC will find materiality in hindsight. Given the burden of monitoring investor communications, public companies will become closed societies, with occasional public rallies. "There's very little upside to the taking of a risk here," declares Kaswell, "and a whole lot of downside for getting it wrong."
While industry lawyers might be nervous about Reg FD, former SEC Counsel Harvey Goldschmid says that his conference calls with executives of the Business Roundtable convince him that few of the large firms in that association see a threat in the proposal. Indeed, the National Investor Relations Institute has reported that 90% of its members won't need to change what they're already doing.
Meanwhile, another of Levitt's calls for openness seems to be working. Some 67% of first-quarter earnings conference calls were open to the public, according to BestCalls.com, compared with 45% in December and 20% a year ago.
Nor does the proposed rule bar one-on-one meetings with investors, says John C. Coffee Jr., professor of corporation and securities law at Columbia. Indeed, he expects the spread of open calls and Webcast investor presentations to fuel increased demand for private meetings with a company, as investors seek a discrete opportunity to ask their really smart questions. Under Reg FD, which Coffee generally supports, corporations might ask investors to sign embargo agreements, giving the company time to publicize any material disclosures.
Hoping to thaw chilly corporate communicators, former SEC counsel Goldschmid says he doubts the commission would bring many selective disclosure cases. "This is not one that we plan to emphasize," he says. |
