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Comment by duxup | Hacker News Reader

A CEO at a company I worked for decided he wouldn't provide guidance anymore because he felt it was damned if he did or didn't. He noted that at the end of a conference call.

Stock dropped like a rock the next morning as if we were sure to close up shop or something the next quarter because we provided no guidance.

Even better the following quarters some silly stock people put out notes that we missed the predicted numbers. The numbers, they just made up their own predictions, and put that in the press release where they used to note guidance we used to provide.

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> because he felt it was damned if he did or didn't. He noted that at the end of a conference call.

Why would he be damned if he does? Because he knows things don't look good. In that case, it makes perfect sense that the stock drops like a rock. Am I missing something?

IIRC, he felt like if he was honest and good at calling the numbers, wall street said it wasn't that great because they didn't exceed the numbers much if at all.

Then again if he played the game and played down expectations stock would drop just on that prediction and wall street's own made up numbers never adjusted to his predictions anyway.... so things would at best be flat.

Generally he was just tired of it all I belive. This was after the .com crash and they had weathered that really well compared to many companies but also this was the time when Wall Street was turning into "short term lots of growth only please" kinda folks and our company was plenty profitable but never going to grow massively.

Interesting. I've heard some people say that the M.O. for wall street these days seems to be:

- during earnings provide extremely positive guidance for next quarter. this will bump stock up

- as time goes by, slowly update your guidance downwards. if this process is slow, hopefully stock won't be very affected. repeat this until you're convinced that your public updated guidance is below your private earnings predictions.

- when earnings come, you'll over-shoot your depressed guidance. This will bump stock up. Again, provide extremely optimistic guidance for next quarter.

I understand your frustration but you can still miss the consensus from analysts. Analysts are paid to give estimates for future price, earnings, sales and so forth for the next few quarters.

Yeah, the company was not missing "the estimates" - Wall St. "analysts" guessed wrong.

I hate how consensus analysis turns out like a dictat from the high priesthood - you must jump this high even though you forecasted something completely different.

On the other hand they published predictions earlier that way shortly too high. In that case those false expectations boosted the stock. So maybe it evens out?

Guess who has those "estimates" and slip them to their investors before anyone else?

The problem is one of informational asymmetry to reward the connected/wealthy.

Even if companies publish their own guidance, Wall St. analyst consensus does not necessarily match, and you can miss on those expectations you did not set anyway.

so.. what happened in the long run?

Company chugged along like they normally did until being slow to adopt new tech caught up to them. The CEO and his buddy the CFO lined their pockets as you would expect until someone bought the company.

But they were solid earners until then as they had put themselves in a good spot and provided outstanding service (well that was me and my buddies). Stock never did much as wall street was entering the phase of demanding short term growth for no apparent reason all the time.

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