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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: zonder who wrote (1102)	5/12/2003 4:36:35 PM
From: Earlie	Read Replies (1) \| Respond to of 4905

Zonder: Ah, First Call data is derived exclusively from the analysts' latest forecasts. First Call receives an increasing number of calls from analysts as a given "numbers release" day approaches. And as Mike noted, the analysts "fine tune" (i.e., bring down their forecasts to about one penny below the number that gets reported), sometimes as late as the morning of numbers release. Fortunately, there are never any "midnight phone calls" (forgive my reference to an old joke from the MB thread days) that might account for this remarkable accuracy. (g) Best, Earlie

To: zonder who wrote (1102)	5/13/2003 12:56:30 AM
From: EL KABONG!!!	Read Replies (1) \| Respond to of 4905

zonder, Actually, measured data from the pre-bubble years showed that, on average, analysts were a bullish lot, and tended to overestimate earnings to the tune of 10% per fiscal year. Revenues expectations were also overestimated, albeit by a smaller margin of "only" 7% (on average). (Source: I had seen these statistics in literature from NAIC, circa 1996-1997. I forget what source they [NAIC] had quoted in their literature.) The bubble years changed those averages however, as analysts consistently underestimated revenues and earnings in what was (in my opinion) a deliberate attempt to set easy revenues/earnings targets for companies, so as to hopefully induce higher stock prices in the markets. As you indicate, at least some analysts are now being more careful, and trying to contain themselves within the "herd" averages, as it no longer pays to go out on a limb and be correct, either to the high side or the low side. There's perceived safety in numbers and being counted amongst the herd. I expect that somewhere along the way, analysts will once again return to their long term averages of overestimating revenues and earnings. One of my favorite analyst stories concerns the bubble years. Some of the sell-side guys (Grubman included, I think, but I could be guessing wrong here) had telecom estimates on a number of companies. Some of their own brokerages also had estimates out on how much the telecom industry in aggregate would grow. The industry (world-wide) was estimated to be something like $750B (wild guess, as I can't recall the real number) for the entire year. Yet, if one went back and totaled up the analysts' estimates for the individual companies that were covered, the revenues easily exceeded the estimated total for the entire world, and these analysts most certainly didn't cover every telecom company in the world. I forget what the exact numbers were and exactly which companies were covered, but I found it amusing when I pointed out the discrepancies in the numbers, numbers that were widely quoted in the media at the time. Simple addition would have shown anyone that the analysts had clearly gaffed. <g> KJC