From CNBC this morning

[Glenn]

"63% of companies have reported earnings that exceeded expectations, and 22% have met expectations."

"How is that compared to previous years and such?"

"It's pretty much what we expected."

/images/graemlins/confused.gif LOL!

[Ashe]

Haha... CNBC is such a joke... but I still watch it...

Great news though /images/graemlins/cool.gif

DIE BEAR, DIE !!!

[Glenn]

I really like CNBC. A number of their reporters are (surprisingly) fairly knowledgable. However the stock analysts they interview are...well...stock analysts.

[Wildbill]

Spitzer has these people on the run. Last thing they want to do is predict a number and give a buy on it and then have it blow up in their face. I think going into the future you will find this to be pretty much a normal ratio, yet lets face it the market knows it and prices accordingly.

[Aragorn]

This is one of the great continuing con jobs. For years companies have realized that beating estimates is good for their stock prices so they manipulate the hell out of the estimates. They feed the analysts whatever they need to be get the right estimate. Then they announce a penny or two higher.

Beating estimates doesn't mean much. Growth in revenue, cash flow, etc, means more.

A lot of folks used to make a lot of money buying stocks that beat their estimates. Then they lost of ton of money.

[Wildbill]

I don't think its so much that anymore, I think company execs are just afraid of the repercussions if they miss. Most companies are conservative because it allows for the little things that can happen that they don't control and they still can come pretty close to target. Remember 9 quarters out of 10 those things won't happen and so the results can be better than guidance. The one quarter something happens and they come pretty close to hitting the numbers. If they are way under then the stock sells off and the worry of shareholder lawsuits come up. So really its a defensive move as much as anything.

[Aragorn]

It's probably not as bad as it used to be, when everyone had tons of options and wanted to manipulate stock prices.

But if you think analysts projections are truely objective or profit numbers aren't still being manipulated, you are probably naive.

Also, there is tremendous pressure on analysts to keep their estimates close to those of others. If you have the same estimate as everyone else and you are wrong, nobody cares. If your estimate is different and you are wrong, you can get fired. But you get little credit for being different and being right.