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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: GVTucker who wrote (113400)	10/16/2000 9:11:45 AM
From: Road Walker	Respond to of 186894

Sunday October 15 1:58 PM ET Disclosure Plays Part in Profit Warnings By Brendan Intindola NEW YORK (Reuters) - A new candor among U.S. companies about flagging profits is inspired in part by new rules aimed to sever the back-channel tidbits companies feed to Wall Street analysts and money managers. The stock market in recent weeks has been spooked by a long parade of blue-chips companies warning about flagging sales and earnings. Many blamed the weak European common currency for lower overseas sales and expense increases due to a sharp rise in crude oil prices. These warnings about future earnings, or pre-announcements in Wall Street lingo, usually hammer stocks. Top computer chip maker Intel Corp. (NasdaqNM:INTC - news) recently lost 22 percent, or close to $100 billion, of its market value when it warned of slowing sales. Part of the story, markets watchers believe, is that companies are abandoning the usual mechanism to soften the stock-market blow -- contacting analysts to reduce their expectations. The reason: a new law, Regulation FD, that will force Corporate America to give individual investors the same information that Wall Street pros get. The rule won't go into effect until Oct. 23, but companies are already complying. ``What we're seeing now is more public dissemination,'' said Joseph Kalinowsky, stock strategist at market research firm I/B/E/S. ``It's really gotten quite heavy, and I suppose it has to do in part with the disclosure rule.'' Expect even more corporate press releases containing dreaded earnings warnings once the new rules become effective, experts say. Also expect more companies missing Wall Street profit estimates because analysts can no longer rely on corporate guidance for their forecasts. Companies already are clamming up to stock analysts. ``The companies are substantially less forthcoming because they don't know what they can and can't do,'' said Edward Tirello, a utilities analyst at Deutsche Banc Alex. Brown. He added, however, utilities rarely guided analysts in the past. A vast majority of U.S. corporations -- 90 percent -- is planning to make procedural and policy changes regarding the release of market sensitive information, said a Thomson Financial/Carson survey of 60 companies released on Friday. ``Regulation FD will change the dynamic of surprise,'' said Scott Rosen, I/B/E/S' director of research. ``We are getting back to the (early) 1990s phenomenon of companies just announcing results. It is up to the analysts to forecast.'' That's a big change from the last decade, when a little corporate guidance made analysts much better at forecasting company results, experts said. The range of analysts' estimates -- or how far individual analysts are off the mean -- last year was 65 percent tighter than in 1990, according to I/B/E/S. Corporations Already Comply Dell Computer Corp. (NYSE:DELL - news), the world's No. 2 maker of personal computers, earlier this month set an example for the new corporate openness, analysts say. The company at an analysts meeting forecasted profits for the fourth quarter would fall slightly below targets -- and sent out a press release that same day. ``They had an analyst meeting scheduled, which was only roughly two-thirds of the way through their quarter. I guess that because of FD, it forced them to pre-announce earlier that they would have,'' said David Bailey, a computer analyst at Gerard Klauer Mattison. ``They probably would have preferred to see a couple more weeks of results before they pre-announced.'' Dell, for its part, denies it has changed its policies on releasing critical financial information. ``We have always made announcements of this nature available to a broader audience,'' said Dell spokeswoman Neisha Frank. ``It happened to with our semi-annual analyst meeting. The timing was a coincidence.'' Be that as it may, data show companies are giving more earnings previews this quarter. Of the 500 companies that make up the Standard & Poor's 500 index, 135 made pre-announcements for the third quarter, compared with 112 in the second quarter and 100 in the first, according to market research firm First Call/Thomson Financial. Among those making such a reality checks are Dell, Intel and other blue-chip names like computer maker Apple Computer Inc. (NasdaqNM:AAPL - news), and photography company Eastman Kodak Co. (NYSE:EK - news). ``The chilling impact has started prior to implementation,'' said Frank Fernandez, director of research at the Securities Industry Association, which had opposed Regulation FD. ``Given the intentionally vague nature of the regulation, corporate counsels are urging issuers to start conforming.''