BARRON’S technology journalist Eric Savitz has lashed out at companies that provide guidance in conference calls but not in their news releases, a practice he says discriminates against individual investors and leads to technical violations of Reg. FD.
Writing on the Tech Trader Daily blog, Savitz says companies that provide guidance only during their conference calls do so to avoid being accountable for their predictions. And he says the practice hurts individual investors and favors institutional investors because they have access to paid transcript services and also have more resources to cover live conference calls.
My own research finds that among U.S. large-cap companies only about half (52%) include some form of guidance — either annual or quarterly — in their earnings releases. I don’t know, however, what percentage of those companies not providing guidance in their releases are providing no guidance at all and how many are providing it in their conference calls.
Why don’t I know that? Well, because it’s impossible for me or my colleagues to listen to conference calls in full during our reviews of investor relations websites. Online audio really sucks as an information delivery medium, especially when you’re looking for something specific like guidance. It’s very easy to miss stuff in an audio replay, especially if replays are not indexed, which 59% aren’t.
It would help enormously if companies gave investors access to transcripts that they could search, but only 10% of the companies we survey offer transcripts on their sites. And almost all of them are our clients.
For the past six years, I’ve been publicly bitching at companies to provide transcripts, but I might as well have been a lone voice baying at the moon. Here’s a piece I wrote in 2001, and here’s a newer one which says transcripts are all about transparency, or rather a lack thereof. (Six years of saying the same thing. What a sucker I am.)
But you want to know something? I’m jealous. Eric Savitz has a much bigger pulpit than me. And he’s also way smarter. Because his solution is genius. Here’s what he wants, and I presume it’s aimed at the SEC:
–Earnings guidance should be published in the form of a press release, either with earnings or separately, and filed in an 8-K with the SEC.
–Transcripts from all corporate conference calls should be required to be filed with the SEC in an 8-K.
Let’s do disclosure the right way – and make corporate managements fully accountable for their forecasts.
Go! Eric, Go!