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New Quarterly earnings statements have a downside
They make it harder for companies to execute long range plans. The lead to "creative" accounting practices to make sure earnings are "correct" instead of simply being accurate.

I've seen several articles where people are suggesting one of the best things to do for the stock market would be to encourage companies to stop releasing quarterly numbers. And forecasts. Especially the forecasts.

Kip Hawley is still an idiot.


Purveyor of Doc Hope's [link|http://DocHope.com|fresh-baked dog biscuits and pet treats].
New GOOG is in that boat.
(Unless things have changed recently,) Google doesn't provide guidance on its stock. While I think it's a good long-term policy, it can have an important downside. [link|http://www.npr.org/templates/story/story.php?storyId=5253416|NPR]:

March 9, 2006 \ufffd Morning Edition Stock in Google slipped 3 percent on Wednesday after the Internet company said it accidentally posted financial forecasts on its Web site. Google says the forecasts were not supposed to be released and that, in some cases, they are no longer accurate.

Google deliberately avoids offering the kind of quarterly sales forecasts that many companies provide. As a result, investors tend to seize on whatever information the company does make public, even accidentally. In recent weeks, that's meant a wild ride for Google stock. Shares that topped $475 less than two months ago are worth 25 percent less today.

Google managers insist they're not distracted by such short-term fluctuations.

"There's this belief that somehow the management team controls the stock price directly. And that's probably illegal. And it's certainly a bad way of running a company," CEO Eric Schmidt told an analysts' conference last week. "Stock price evolves as a lagging indicator of the greatness of a business and its success. And any attempt to manipulate it, other than as a lagging indicator, to me is suspect."

Google stressed its long-term orientation two years ago when it first sold stock to the public. A "founders memo" drafted by co-founder Larry Page said Google would not provide traditional quarterly financial forecasts. Page said focusing on such short-term targets would be as pointless as a dieter stepping on a scale every half hour.

In the absence of quarterly guidance about sales and profits, though, investors have been left to guess about Google's weight. That can cause big swings in the company's stock price, whenever the chief financial officer warns of slowing growth, for example, or when outdated information is accidentally posted on the Google website.

"The no-guidance policy generally tends to make things more volatile, not less volatile for the stock. So as an analyst, we usually recommend against that," said Senior Analyst Safa Rashtchy of Piper Jaffray.


Of course a stock analyst is going to say that lack of guidance is bad... And of course, stocks that provide do guidance can have large swings too (like when they don't achieve the guidance numbers).

IIRC, Google has also said that they'll never split the stock, either. While that may make it more difficult for people to buy onesies or twosies of the stock, there are [link|http://boards.fool.com/Message.asp?mid=25722262&sort=postdate|ways around that], too. And the benefit is there isn't the overhead cost of doing the transaction for little objective benefit. I'm sure Rastchy would disagree with that policy as well. ;-)

     'The Smartest Guys in the Room' - (Ashton) - (7)
         ahem, there is no regulatory requirement for - (boxley) - (4)
             Thom Hartmann makes this point - (tjsinclair)
             Ferrous ions are everywhere, here - (Ashton) - (2)
                 didnt anyone ever tell ya that the stock market - (boxley) - (1)
                     There are limits to the shell game - - (Ashton)
         Quarterly earnings statements have a downside - (drewk) - (1)
             GOOG is in that boat. - (Another Scott)

Oh look... it's a dork!
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