Comments on: Earnings Guidances: Stay Or Go? http://www.investorgeeks.com/articles/2006/09/05/earnings-guidances-stay-or-go/ Learning and sharing investment knowledge. Thu, 04 Dec 2008 20:37:13 +0000 http://wordpress.org/?v=2.0.4 by: Brennan http://www.investorgeeks.com/articles/2006/09/05/earnings-guidances-stay-or-go/#comment-4413 Wed, 06 Sep 2006 09:14:59 +0000 http://www.investorgeeks.com/articles/2006/09/05/earnings-guidances-stay-or-go/#comment-4413 I say keep 'em and why not? Both analysts and corporate executives can gather, process, and evaluate financial information more economically and accurately than individual investors and creditors, because they possess special skills or knowledge and they may have access to specialized resources provided by their respective organizations. I agree with your statement on guidance being equivalent to financial-fast-food BUT most investors don't buy and sell securities for a living or even as a hobby - stocks are simply a means to diversify and when investing in a commercial banking company or public utility company why wouldn't they take the financial information at face value? They don't understand a lot of what's in a 10-K pr other information such as proxy statements and industry journals, or that companies consider the costs and benefits of disclosing certain financial information which in turn, might not reveal the whole picture. Not only do the quarterly statements and guidances provide valuable, yes - I said it, valuable information to investors and analysts but creditors also demand this information! Creditors must use these statements to assess a company's ability to meet its debt-related financial obligations through the timely payment of interest and principal, or through asset liquidation in the event interest and principal cannot be repaid. If a company lowers guidance and states that there has been a reduction in cash flows the creditors to that company are going to judge them as a higher credit risk and charge higher rates of interest or depending on how severe the downturn in cash flows is, they may place covenants on the loan agreements which may restrict a company from paying dividends, selling assets, buying other companies, forming joint ventures, or borrowing additional funds without prior approval by the lender. I could go on and on (and I already have) but my sentiment is that ANY financial information is VALUABLE information - so long as the investors or analysts or creditors or suppliers or even your own grandmother have the knowledge to interpret the information and use it to make smart investment decisions. I say keep ‘em and why not? Both analysts and corporate executives can gather, process, and evaluate financial information more economically and accurately than individual investors and creditors, because they possess special skills or knowledge and they may have access to specialized resources provided by their respective organizations. I agree with your statement on guidance being equivalent to financial-fast-food BUT most investors don’t buy and sell securities for a living or even as a hobby - stocks are simply a means to diversify and when investing in a commercial banking company or public utility company why wouldn’t they take the financial information at face value? They don’t understand a lot of what’s in a 10-K pr other information such as proxy statements and industry journals, or that companies consider the costs and benefits of disclosing certain financial information which in turn, might not reveal the whole picture. Not only do the quarterly statements and guidances provide valuable, yes - I said it, valuable information to investors and analysts but creditors also demand this information! Creditors must use these statements to assess a company’s ability to meet its debt-related financial obligations through the timely payment of interest and principal, or through asset liquidation in the event interest and principal cannot be repaid. If a company lowers guidance and states that there has been a reduction in cash flows the creditors to that company are going to judge them as a higher credit risk and charge higher rates of interest or depending on how severe the downturn in cash flows is, they may place covenants on the loan agreements which may restrict a company from paying dividends, selling assets, buying other companies, forming joint ventures, or borrowing additional funds without prior approval by the lender. I could go on and on (and I already have) but my sentiment is that ANY financial information is VALUABLE information - so long as the investors or analysts or creditors or suppliers or even your own grandmother have the knowledge to interpret the information and use it to make smart investment decisions.

]]> by: Crazy Jim Smith http://www.investorgeeks.com/articles/2006/09/05/earnings-guidances-stay-or-go/#comment-4393 Tue, 05 Sep 2006 19:58:57 +0000 http://www.investorgeeks.com/articles/2006/09/05/earnings-guidances-stay-or-go/#comment-4393 I have mixed views as well. What annoys me is that the analysts regularly get access to information that the public do not have access to. Some would call it insider trading. I have mixed views as well. What annoys me is that the analysts regularly get access to information that the public do not have access to.

Some would call it insider trading.

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