Providing Earnings Guidance

The morning blog published by the CFO Journal of The Wall Street Journal last week opened with a mention of Alex Edmans, Professor of Finance at London Business School, and his advice to companies on Five Ways CFOs Can Focus on the Long Term. One of the ways Edmans described is to avoid providing earnings guidance, which is quoted below. “Avoid Providing Earnings Guidance. Providing guidance on likely quarterly earnings numbers increases transparency, but also means that the market holds firms accountable to their forecasts. Thus, companies will focus on meeting short-term targets, rather than pursuing long-term value,” Alex Edmans. Promoting a short-term view by providing earnings guidance is an unintended consequence of the Fair Disclosure Act of 2000, in my opinion. I also believe we have come a long way in the last fifteen years under the watchful eye of FD. Many corporations have learned how to provide guidance […] Read more »

Earnings Quiet Period

My professional organization, National Investor Relations Institute (NIRI), hosted a webinar about Quiet Period practices on May 20, 2015. I joined two other experienced investor relations professionals to comprise the panel of speakers for the webinar.   The archive is accessible on www.niri.org by members only. The following are my webinar speaking notes for people who do not have access. I am a proponent of quiet periods prior to the release of earnings. It minimizes the risk for misinterpretation and the spread of rumors and/or speculation prior to an earnings announcement.   All of which can cause stock volatility and a distraction while preparing for the actual release of earnings and conference call. This is particularly a risk for companies offering “earnings guidance” or management outlook on future earnings. The quiet period for the release of earnings is not well defined. Stock offerings such as an initial public offering by new issuers […] Read more »

Top Ten Attractions for Activist Shareholders

Here is a list of Top Ten corporate characteristics that are sure to attract Activist Shareholders to companies.Desire to fly under the radar is Number One because it typically leads to a lower valuation of common stock and a buying opportunity for Activist Shareholders.  It is also the most time consuming to change of the ten characteristics listed. The Heights is an experienced, responsive and intuitive investor relations consultancy with a proven process designed to build a comprehensive three-year IR Plan in three months. Our guaranteed approach removes the guesswork, makes an immediate impression within the financial community and allows you to focus on running your business and building value for your shareholders. More information about The Heights is available on www.theheights-planning.com.       Read more »

Shareholder Angst During M&A – Part 3

This is the last of a three-part series about maintaining shareholder confidence through the completion of acquisitions, divestitures and spin-offs. 1)    Common elements of the initial announcement (published November 23, 2014) 2)    Sample questions in preparation for Q&A (published December 16, 2014) 3)    Aligning shareholder mix with new investment characteristics (January 30, 2015) The first two parts focused on the mechanics of providing timely, comprehensive and accurate information to encourage sound investment decisions at the time of announcement.   This installment recognizes the possible shift in your shareholder mix as a result of the announcement and what companies can do to influence the change. A great deal of information about institutional investment styles and targeting investors already appears on this web site.  The information will not be repeated here, but a list of previously published material on both topics can be found at the end of this article. A shift in […] Read more »

Shareholder Angst During M&A – Part 2

Maintaining shareholder confidence during acquisitions, divestitures and spin-offs can be challenging.  Managing shareholder expectations for the ongoing business while managing expectations for the successful completion of the transaction is demanding. This is the second of a three-part series about maintaining shareholder confidence through the completion of transactions which accelerate changes in your company’s investment characteristics.   This installment is about answering questions following the initial announcement. 1)    Common elements of the initial announcement (published November 23, 2014) 2)    Sample questions in preparation for Q&A (published December 16, 2014) 3)    Aligning shareholder mix with new investment characteristics Q&A provides the greatest opportunity to get off point and distracted from key messages about the timing, financial specifics and long-term strategic significance of the transaction.  The same is true for any interaction from conference calls to face-to-face meetings with existing and prospective shareholders, particularly when questions appear to come from left field or focus […] Read more »