To: JMD who wrote (8190 ) 2/8/1998 11:44:00 AM From: Gregg Powers Read Replies (3) | Respond to
On the topic of Wall Street analysts. God help me, but here are some thoughts. The typical sell-side (i.e. brokerage house) analyst follows something between five and fifteen companies. His work day is divided between research, talking to his salesforce, responding to in-bound client calls, writing reports, working with investment banking clients, finding new research ideas and traveling to meet with clients and companies and so forth. Each activity is not equally lucrative. Investment banking is VERY profitable, trading stock at $0.05/shr is less so. So priorities tend to be driven by economics. As a result, many analysts do not (and can not) allocate the time to understand all the moving parts in a complicated investment story like QC (nobody on the Street, for example, has ever shown me a thoughtful deconsolidation of QPE's margins between Sony and QC). Instead, most speak with management and then embellish the company line to support their investment thesis (which is why managerial credibility is so important). When something goes bump in the night, the analyst needs someone to blame--so he throws rocks at management. Boys will be boys. But all the boys are not equal. Sure, Alex Cena banked QC--but he also knows the company extremely well and is a smart, thoughtful analyst. Tim Luke worked with Alex at Lehman, and also is a careful guy who understands the moving parts well. Greg Geiling, at JP Morgan, is my favorite "up and comer". He is young, fastidious, very bright and determined to get the right answers--I don't always agree with his conclusions, but he tries very hard. Some of the other boys, particularly those with banking relationships involving Ericsson, tend to be--how shall I put this--full of poop. Will the analysts drop coverage on QC? Doubtful. The market capitalization is too big, the stock trades too well and the company is too important within the wireless universe. Will QC be in the penalty box for a while--sure. Now let me ask a question.. Do you think that a management team smart enough to pioneer a hideously complicated technology like CDMA, would be dumb enough to play games with investors to gain a two-week improvement in the company's stock price? To what end? Irwin and Harvey have run public companies for over twenty years, do you think they enjoy a public lynching? Get real.
