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Technology Stocks : Oracle Corporation (ORCL) -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (4814)	12/28/1997 9:28:00 AM
From: Chuck. Edwards	Respond to of 19080

Off-topic: I wouldn't trash analysts too heavily. Their job is equivalent to forecasting the weather -- they necessarily operate with incomplete information. By definition, they have less information on a given company than the managers do, and sometimes the managers themselves don't do that good a job of forecasting their own earnings (case in point -- Oracle). Downgrades and estimate reductions after the bad news comes out is part of the necessary adjustment after unexpected news -- of course it is embarrassing, but how could analysts do otherwise? The world has changed, and they must change their outlook -- anything else is to deny reality. With regard to analyst estimates, the best thing to do is take them with a grain of salt -- examine the logic behind each estimate (not so easy to do, because you have to get the analyst report, but I have done it). Then, make up your mind whether you agree or disagree with the analyst. Above all, don't put too much faith in projections of earnings growth based on analyst estimates -- I have seen many stock screens this past year that turned up disk drive manufacturers as phenomenally cheap based on projected earnings growth rate. We all know what happened to their growth, and their stock price. Anyone who knows ANYTHING about the notoriously cyclical drive manufacturers could tell that projecting the recent growth curve out to the future was insane. Yet people kept plugging in consensus earnings estimates without regard to the quality of the estimate, and, of course, GIGO. Cheers Chuck Edwards