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

To: Mike M2 who wrote (1197)	5/13/2003 11:10:35 AM
From: zonder	Read Replies (1) \| Respond to of 4907

companies that beat earnings estimates out performed the general market. Sure. That day or that week. But what was their underperformance in the weeks and months before? The study covered the pre-bubble years when analysts were more objective not quasi sales/marketing men for investment bankers I was an analyst in those years, and trust me, it was all the same. We were always pressured to write flattering reports for IPOs. We could take a great risk and refuse to do it if we hated the company so much that we didn't even think it should be offered to the public (crooked management, etc). Otherwise, we would value the company, decide on its offering price, and go on the roadshow to defend our valuation and convince clients to buy the IPO. The soi-disant Chinese Walls between Research and Corporate Finance departments were knee high... And it was the same everywhere. The reported was widely celebrated but few noticed that the estimate was for $3.25 at the beginning of the quarter. I have obviously not seen the study you are referring to, but assuming that the stock declined considerably as its estimates were lowered over time, it is not surprising at all that it should rally after the earnings were announced beating the estimate. P.S.: Why do you sign off "mike" although your name seems to be "william e. magner"? :-)