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Digg it UP - Earnings Season - A Time To Be Very Careful
If you looking start building credit for the first time, or rebuilding your credit after a bankruptcy or credit problems, a secured credit card can be a great way to start.A secured credit card is basically the same as an unsecured credit card; it has the same features, flexibility and use. There is no print on the card that identifies it as a secured card—that’s just between the card holder and the issuer. And just like any other credit card, it’s accepted at merchants throughout the world who accept credit cards.To get a secured credit card, you must open a savings account or a CD account in your name. Next, you deposit a certain sum of money into the account, which will serve as the collateral for the card. For example, if you deposit $1000 into the bank account, then the credit limit on the card will be $1000. If you are ever in default with the card, the bank will have the right to take the money from the savings or CD account to pay the balance. The money you deposit will earn interest, but you will be restricted from removing it from the account at any time. (Of course, you cancel the card with no balance on it.) The secured credit card bank will determine the amount of the deposits required to receive a secured credit card.You will be responsible for paying the credit card bill every month, just like you would an unsecured card. Every time you make a payment on time, it will show as a good mark on your credit report. But be fore warned! Every time you are late, that will show up, too! In addition, just like a regular credit card, you will pay fees and interest if the balance
Now if you are a longer term investor, earnings announcements may not present the same risk to the price of a company's stock. As long as the fundamentals of the company remain strong and the price has not reached or approached the target exit price, you may be willing to hold through earnings announcement. It is important to review the fundamentals of a company before they announce earnings, looking for signs of potential problems.
Earnings Manipulation So do companies manipulate their earnings? Well, I found this study interesting. A University of Illinois economist who analyzed thousands of forecasts of publicly owned companies between 1989 and 1998 found that there was a significantly higher probability for a company to beat the consensus forecast if the forecast was lowered two weeks prior to the announcement. "We document empirically that many firms apparently have ways of lowering the forecasts as the earnings announcement date approaches," said Dan Bernhardt, the UI economist who conducted the study with Murillo Campello, an economist at Michigan State University.
Bernhardt theorized that less experienced analysts were more likely to make late forecasts and were more likely to revise their forecasts than analysts who had covered a company for a longer period. Also there is sometimes a legitimate reason for management to lower expectations, or create "slack." Especially in fast-growing companies, earnings may change dramatically in the weeks or even days before a quarter ends.
Early in my career I worked in the Finance department of a large bank preparing the performance reports for senior management and the Board of Directors. As you may know it is quite easy for banks to manipulate their earnings in addition to estimating taxes owed. Each quarter a bank estimates their loan losses that they will write off as an expense. Estimating this expense is part estimating what real losses and part what the CEO wants the earnings to be. Usually the CEO sought to even out earnings growth by increasing or decreasi
I know you are a polite person...and probably say thank you to most of your clients.But that is not what I am talking about here...I am talking about saying thank you to the people who refer you new customers!I mean...referrals are easier to deal with than a brand new customer right? Customers who have been referred to you by someone else already are "pre-sold" by the recommendation made from the referrer.So why is it that I see way too many business owners take referrals for granted?You read that right. Too many business owners take referrals for granted. Please allow me to paint you two scenarios, simplified for this post:1) The typical referral sale. In this scenario we will use a real estate office. One of the real estate agents is an absolute superstar, and finishes showing and selling a home to new clients. After completing the purchase of a new home...the clients are excited. They have just made their dreams come true...and they want to refer one of their friends to their "new best friend" in the real estate business.Here is where it gets plain ugly...the referred parties come into the office of the real estate agent and complete a home purchase of their own. The real estate agent continues on his/her daily business. This happens daily in almost EVERY business in the USA! One thing wrong...THE AGENT DID NOT THANK THE CLIENTS THAT REFERRED THEIR FRIENDS! Big mistake...because here is what could have happened...2) The "supposed to happen" referral sale. Let's use the same scenario in #1, but with one exception, the agent sends a thank you card
Intel's Earnings Punished Their Shareholders Intel's shareholders were punished on January 18, 2006 when the company announced its Fourth Quarter Earnings Report and the stock plunged 2.90 points or 11.4%. If you have access to a stock charting service you might want to look at the chart to gain a better understanding of the dramatic drop in share value. Needless to say, many investors were caught off guard. Since that date, those that are still holding Intel stock have continued to experience further losses. Not a pleasant experience.
The reason I choose Intel for this example is it is widely held, a quality company with excellent management and they have a very nice way to demonstrate the problem that can take place during earnings season. Please do not misconstrue my comments on Intel to mean that their management was trying to hide information from investors and analysts. They were not.
Intel releases their Revenue Announcements and Earnings Releases after the market closes on the day indicated. The market reacts to these announcements the next day it is open (some after market trading takes place, however, most of the volume is experienced the next day).
Let's look at the events before and after this earnings announcement. On December 8, 2005 Intel provided the following release regarding their revenue expectations for the 4th quarter:
Intel Fourth-Quarter Business Consistent With Expectations SANTA CLARA, Calif., Dec. 8, 2005 - Intel Corporation expects revenue for the fourth quarter to be between $10.4 billion and $10.6 billion, as compared to the previous range of $10.2 billion to $10.8 billion.
The fourth-quarter gross margin percentage expectation has been narrowed to 63 percent, plus or minus a point, and is expected to be slightly above the midpoint of the new range. The previous expectation was 63 percent, plus or minus a couple of points. Capital spending is expected to be below the midpoint of the previous expectation of $5.9 billion, plus or minus $200 million. All other expectations are unchanged.
Now let's look at the part of the earnings release after the market closed on January 17, 2006, keeping in mind the revenue announcement above:
Intel Fourth-Quarter Revenue $10.2 Billion; EPS 40 Cents
- Record quarterly and annual revenue and operating income
- Record quarterly unit shipments of mobile, desktop and server microprocessors
Financial Review
Fourth-quarter gross margin was 61.8 percent, slightly below the company's updated expectation of 63 percent, plus or minus a point, primarily due to lower than expected revenue, a slight shift in the overall product mix to non-microprocessor products, and some inventory valuation adjustments to reflect lower unit costs.
First, note that the revenue Intel reported for the fourth quarter was below the ranges they had indicated in their Dec 8, 2005 announcement ($10.2 billion vs. a range of $10.4 to $10.6 billion). Also, their gross margin was below what they indicated in their Dec 8, 2005 announcement (61.2% vs. 63%, plus or minus a point).
As shown by the chart the market reacted positively to the revenue announcement on Dec 8, 2005. The price of the stock rose for several days, and then pulled back before rising again. Each rise stopped short of the previous high. If you believe in technical analysis, this indicates weakness, at least short term.
On Jan 18, 2006 the price of Intel's stock dropped 2.9 points of 11.4%. The price continued to fall for several days. Obviously, investors were not satisfied with Intel's actual revenues and gross margin. They were also concerned that the market for Intel's products was weak and experiencing significant competition. Advanced Micro Devices, a competitor of Intel's has been able to capture some market share from Intel as well.
Next let's look at their revenue announcement for first quarter 2006 on March 3, 2006:
Intel First-Quarter Revenue Below Expectations SANTA CLARA, Calif., March 3, 2006 - Intel Corporation today announced that first-quarter revenue is expected to be between $8.7 billion and $9.1 billion, as compared to the previous expectation of between $9.1 billion and $9.7 billion, primarily due to weaker than expected demand and a slight market segment share loss.
The company expects the first-quarter gross margin percentage to be adversely impacted by the change in revenue. Expenses (R&D plus MG&A) are expected to be lower than previously forecast due to lower revenue- and profit-related spending.
And now Intel's first quarter earnings release:Intel First-Quarter Revenue $8.9 Billion
• $2.9 billion used to repurchase 138.5 million shares SANTA CLARA, Calif., April 19, 2006 - Intel Corporation today announced first-quarter revenue of $8.9 billion, operating income of $1.7 billion, net income of $1.3 billion and earnings per share (EPS) of 23 cents. Excluding the effects of share-based compensation, the company posted operating income of $2.1 billion, net income of $1.6 billion and EPS of 27 cents.
This time actual revenue was within the pre-announced range. And notice that price of Intel's stock did not react in any dramatic way. It did move lower in May due to the overall market and the NASDAQ falling.
So what are we to make of this sample of earnings releases?
Trading Online Markets' Approach As a trader who holds a stock days or weeks, I have a rule that I will not hold a stock into its earnings announcement. To often the price of stock falls immediately after earnings are announced. This discipline has protected me from incurring losses when a company announced its earnings. It saved me substantial money a number of times. If I am trading short term, I still follow this rule. I document the next earnings date on my Watch List, just to remind me to be aware of when earnings will be announced.
At Trading Online Market's I am willing to hold through earnings if the company's fundamentals remain strong and the stock chart does not indicate any potential problems. First, I recommend everyone read the article by Herb Greenberg, Don't Get Blindsided, available at http://www.marketwatch.com/news/story/Story.aspx?guid=%7bE99E0285-7FBB-41D3-AD7D-C4077119D7BE%7d&siteid= which addresses some of the problems that need to be explored. Herb always takes a critical look at companies and presents a good perspective. In this article he comments on what are some of the issues investors should watch for before earnings are announced. Definitely worth the read.
The companies on my watch list and in the portfolios are those that I believe the market has undervalued and are fundamentally strong. These stocks present buying opportunities at deflated prices. Usually they have pulled back due to overall market conditions, or the sector is out of favor. They may have even experienced some bad news that is temporary. As such I generally hold these stocks through their earnings announcements. In fact, often these companies will experience good earnings and beat expectations.
You should monitor quarterly earnings announcements to be sure the fundamentals are still intact. Should the price pull back to a support level, then it might be a good opportunity to make a strategic buy. If part of the announcement changes your view of the fundamentals of the company, then it is time to sell. If the news is worse than you expected, then it is best to get of the stock, since bad news seems to follow bad news. Every stock is updated shortly before earnings are announced and then again after they are released with my opinion of what to do regarding the stock.
Now if you are a longer term investor, earnings announcements may not present the same risk to the price of a company's stock. As long as the fundamentals of the company remain strong and the price has not reached or approached the target exit price, you may be willing to hold through earnings announcement. It is important to review the fundamentals of a company before they announce earnings, looking for signs of potential problems.
Earnings Manipulation So do companies manipulate their earnings? Well, I found this study interesting. A University of Illinois economist who analyzed thousands of forecasts of publicly owned companies between 1989 and 1998 found that there was a significantly higher probability for a company to beat the consensus forecast if the forecast was lowered two weeks prior to the announcement. "We document empirically that many firms apparently have ways of lowering the forecasts as the earnings announcement date approaches," said Dan Bernhardt, the UI economist who conducted the study with Murillo Campello, an economist at Michigan State University.
Bernhardt theorized that less experienced analysts were more likely to make late forecasts and were more likely to revise their forecasts than analysts who had covered a company for a longer period. Also there is sometimes a legitimate reason for management to lower expectations, or create "slack." Especially in fast-growing companies, earnings may change dramatically in the weeks or even days before a quarter ends.
Early in my career I worked in the Finance department of a large bank preparing the performance reports for senior management and the Board of Directors. As you may know it is quite easy for banks to manipulate their earnings in addition to estimating taxes owed. Each quarter a bank estimates their loan losses that they will write off as an expense. Estimating this expense is part estimating what real losses and part what the CEO wants the earnings to be. Usually the CEO sought to even out earnings growth by increasing or decreasin
Don’t Spread Yourself Too Thin:This may sound like a no-brainer and I’m sure you have heard it before, but focus on one piece of the puzzle at a time. In order to grow in this business to a considerable amount of income, your cash flow must be monitored. First off, you are going to have to develop you sales approach on a particular product or group of products in order to maximize your chances of making initial sales. Believe it or not, this is why most people fail in affiliate marketing. If you cannot manage to generate any initial income, your bills will eventual begin to accumulate to the point where your business efforts are not profitable. This is not a hobby, treat it like a business and it will pay you like one. Your goal should be to develop your business while keeping it profitable.How do you make sales to maintain a cash flow?Making sales is not difficult if you have an overall strategy in mind. In order to make sales you should implement multiple proven strategies. These strategies should be used on product review pages. Each product you decide to promote should have its own page on your site. This will not only improve your rankings for that product, but it will also maintain the focus of the visitor on the product you are attempting to sell. Use the following strategies on each product review page:1. Reviews:Here you can either review the product you are selling or you can review another product. That may sound crazy, but there are better versions of products already being sold and you may wish to leach off of their traffic to promote a similar product. Additionally, y
Intel Fourth-Quarter Business Consistent With Expectations SANTA CLARA, Calif., Dec. 8, 2005 - Intel Corporation expects revenue for the fourth quarter to be between $10.4 billion and $10.6 billion, as compared to the previous range of $10.2 billion to $10.8 billion.
The fourth-quarter gross margin percentage expectation has been narrowed to 63 percent, plus or minus a point, and is expected to be slightly above the midpoint of the new range. The previous expectation was 63 percent, plus or minus a couple of points. Capital spending is expected to be below the midpoint of the previous expectation of $5.9 billion, plus or minus $200 million. All other expectations are unchanged.
Now let's look at the part of the earnings release after the market closed on January 17, 2006, keeping in mind the revenue announcement above:
Intel Fourth-Quarter Revenue $10.2 Billion; EPS 40 Cents
- Record quarterly and annual revenue and operating income
- Record quarterly unit shipments of mobile, desktop and server microprocessors
Financial Review
Fourth-quarter gross margin was 61.8 percent, slightly below the company's updated expectation of 63 percent, plus or minus a point, primarily due to lower than expected revenue, a slight shift in the overall product mix to non-microprocessor products, and some inventory valuation adjustments to reflect lower unit costs.
First, note that the revenue Intel reported for the fourth quarter was below the ranges they had indicated in their Dec 8, 2005 announcement ($10.2 billion vs. a range of $10.4 to $10.6 billion). Also, their gross margin was below what they indicated in their Dec 8, 2005 announcement (61.2% vs. 63%, plus or minus a point).
As shown by the chart the market reacted positively to the revenue announcement on Dec 8, 2005. The price of the stock rose for several days, and then pulled back before rising again. Each rise stopped short of the previous high. If you believe in technical analysis, this indicates weakness, at least short term.
On Jan 18, 2006 the price of Intel's stock dropped 2.9 points of 11.4%. The price continued to fall for several days. Obviously, investors were not satisfied with Intel's actual revenues and gross margin. They were also concerned that the market for Intel's products was weak and experiencing significant competition. Advanced Micro Devices, a competitor of Intel's has been able to capture some market share from Intel as well.
Next let's look at their revenue announcement for first quarter 2006 on March 3, 2006:
Intel First-Quarter Revenue Below Expectations SANTA CLARA, Calif., March 3, 2006 - Intel Corporation today announced that first-quarter revenue is expected to be between $8.7 billion and $9.1 billion, as compared to the previous expectation of between $9.1 billion and $9.7 billion, primarily due to weaker than expected demand and a slight market segment share loss.
The company expects the first-quarter gross margin percentage to be adversely impacted by the change in revenue. Expenses (R&D plus MG&A) are expected to be lower than previously forecast due to lower revenue- and profit-related spending.
And now Intel's first quarter earnings release:Intel First-Quarter Revenue $8.9 Billion
• $2.9 billion used to repurchase 138.5 million shares SANTA CLARA, Calif., April 19, 2006 - Intel Corporation today announced first-quarter revenue of $8.9 billion, operating income of $1.7 billion, net income of $1.3 billion and earnings per share (EPS) of 23 cents. Excluding the effects of share-based compensation, the company posted operating income of $2.1 billion, net income of $1.6 billion and EPS of 27 cents.
This time actual revenue was within the pre-announced range. And notice that price of Intel's stock did not react in any dramatic way. It did move lower in May due to the overall market and the NASDAQ falling.
So what are we to make of this sample of earnings releases?
Trading Online Markets' Approach As a trader who holds a stock days or weeks, I have a rule that I will not hold a stock into its earnings announcement. To often the price of stock falls immediately after earnings are announced. This discipline has protected me from incurring losses when a company announced its earnings. It saved me substantial money a number of times. If I am trading short term, I still follow this rule. I document the next earnings date on my Watch List, just to remind me to be aware of when earnings will be announced.
At Trading Online Market's I am willing to hold through earnings if the company's fundamentals remain strong and the stock chart does not indicate any potential problems. First, I recommend everyone read the article by Herb Greenberg, Don't Get Blindsided, available at http://www.marketwatch.com/news/story/Story.aspx?guid=%7bE99E0285-7FBB-41D3-AD7D-C4077119D7BE%7d&siteid= which addresses some of the problems that need to be explored. Herb always takes a critical look at companies and presents a good perspective. In this article he comments on what are some of the issues investors should watch for before earnings are announced. Definitely worth the read.
The companies on my watch list and in the portfolios are those that I believe the market has undervalued and are fundamentally strong. These stocks present buying opportunities at deflated prices. Usually they have pulled back due to overall market conditions, or the sector is out of favor. They may have even experienced some bad news that is temporary. As such I generally hold these stocks through their earnings announcements. In fact, often these companies will experience good earnings and beat expectations.
You should monitor quarterly earnings announcements to be sure the fundamentals are still intact. Should the price pull back to a support level, then it might be a good opportunity to make a strategic buy. If part of the announcement changes your view of the fundamentals of the company, then it is time to sell. If the news is worse than you expected, then it is best to get of the stock, since bad news seems to follow bad news. Every stock is updated shortly before earnings are announced and then again after they are released with my opinion of what to do regarding the stock.
Now if you are a longer term investor, earnings announcements may not present the same risk to the price of a company's stock. As long as the fundamentals of the company remain strong and the price has not reached or approached the target exit price, you may be willing to hold through earnings announcement. It is important to review the fundamentals of a company before they announce earnings, looking for signs of potential problems.
Earnings Manipulation So do companies manipulate their earnings? Well, I found this study interesting. A University of Illinois economist who analyzed thousands of forecasts of publicly owned companies between 1989 and 1998 found that there was a significantly higher probability for a company to beat the consensus forecast if the forecast was lowered two weeks prior to the announcement. "We document empirically that many firms apparently have ways of lowering the forecasts as the earnings announcement date approaches," said Dan Bernhardt, the UI economist who conducted the study with Murillo Campello, an economist at Michigan State University.
Bernhardt theorized that less experienced analysts were more likely to make late forecasts and were more likely to revise their forecasts than analysts who had covered a company for a longer period. Also there is sometimes a legitimate reason for management to lower expectations, or create "slack." Especially in fast-growing companies, earnings may change dramatically in the weeks or even days before a quarter ends.
Early in my career I worked in the Finance department of a large bank preparing the performance reports for senior management and the Board of Directors. As you may know it is quite easy for banks to manipulate their earnings in addition to estimating taxes owed. Each quarter a bank estimates their loan losses that they will write off as an expense. Estimating this expense is part estimating what real losses and part what the CEO wants the earnings to be. Usually the CEO sought to even out earnings growth by increasing or decreasi
People negotiate differently and behave differently during the negotiation process.We can observe different styles of negotiation and how different types of behaviour can affect the outcome of negotiations.In commercial negotiations, some people negotiate quickly and take risks, others take their time and try to avoid risk. Some buyers are very loyal, others will automatically shop around. Some negotiators can be quite intimidating to the point of being rude; others are quite passive and easily manipulated.This makes selling and negotiating a real challenge. To negotiate with all these different buyer types we need to be able to adapt our behaviour and be flexible in our approach.To begin this process we can look at two aspects of buyer behaviour; assertiveness and responsiveness.People who are assertive are confident and know what they want. They are not afraid to put forward opinions and are willing to listen to the opinions of others. They are not afraid of conflict and will be more than happy to argue their case.People who are highly assertive can be seen as being aggressive while people who lack assertiveness are often passive and get taken advantage of. There are times when it is appropriate to be more or less assertive and we need to recognise when these times are.Responsiveness means the extent to which people are willing to respond to us and our questions. Some people are highly responsive and will give lots of information about themselves, their problems and needs. Others are unwilling or unable to respond in this way and we see t
On Jan 18, 2006 the price of Intel's stock dropped 2.9 points of 11.4%. The price continued to fall for several days. Obviously, investors were not satisfied with Intel's actual revenues and gross margin. They were also concerned that the market for Intel's products was weak and experiencing significant competition. Advanced Micro Devices, a competitor of Intel's has been able to capture some market share from Intel as well.
Next let's look at their revenue announcement for first quarter 2006 on March 3, 2006:
Intel First-Quarter Revenue Below Expectations SANTA CLARA, Calif., March 3, 2006 - Intel Corporation today announced that first-quarter revenue is expected to be between $8.7 billion and $9.1 billion, as compared to the previous expectation of between $9.1 billion and $9.7 billion, primarily due to weaker than expected demand and a slight market segment share loss.
The company expects the first-quarter gross margin percentage to be adversely impacted by the change in revenue. Expenses (R&D plus MG&A) are expected to be lower than previously forecast due to lower revenue- and profit-related spending.
And now Intel's first quarter earnings release:Intel First-Quarter Revenue $8.9 Billion
• $2.9 billion used to repurchase 138.5 million shares SANTA CLARA, Calif., April 19, 2006 - Intel Corporation today announced first-quarter revenue of $8.9 billion, operating income of $1.7 billion, net income of $1.3 billion and earnings per share (EPS) of 23 cents. Excluding the effects of share-based compensation, the company posted operating income of $2.1 billion, net income of $1.6 billion and EPS of 27 cents.
This time actual revenue was within the pre-announced range. And notice that price of Intel's stock did not react in any dramatic way. It did move lower in May due to the overall market and the NASDAQ falling.
So what are we to make of this sample of earnings releases?
Trading Online Markets' Approach As a trader who holds a stock days or weeks, I have a rule that I will not hold a stock into its earnings announcement. To often the price of stock falls immediately after earnings are announced. This discipline has protected me from incurring losses when a company announced its earnings. It saved me substantial money a number of times. If I am trading short term, I still follow this rule. I document the next earnings date on my Watch List, just to remind me to be aware of when earnings will be announced.
At Trading Online Market's I am willing to hold through earnings if the company's fundamentals remain strong and the stock chart does not indicate any potential problems. First, I recommend everyone read the article by Herb Greenberg, Don't Get Blindsided, available at http://www.marketwatch.com/news/story/Story.aspx?guid=%7bE99E0285-7FBB-41D3-AD7D-C4077119D7BE%7d&siteid= which addresses some of the problems that need to be explored. Herb always takes a critical look at companies and presents a good perspective. In this article he comments on what are some of the issues investors should watch for before earnings are announced. Definitely worth the read.
The companies on my watch list and in the portfolios are those that I believe the market has undervalued and are fundamentally strong. These stocks present buying opportunities at deflated prices. Usually they have pulled back due to overall market conditions, or the sector is out of favor. They may have even experienced some bad news that is temporary. As such I generally hold these stocks through their earnings announcements. In fact, often these companies will experience good earnings and beat expectations.
You should monitor quarterly earnings announcements to be sure the fundamentals are still intact. Should the price pull back to a support level, then it might be a good opportunity to make a strategic buy. If part of the announcement changes your view of the fundamentals of the company, then it is time to sell. If the news is worse than you expected, then it is best to get of the stock, since bad news seems to follow bad news. Every stock is updated shortly before earnings are announced and then again after they are released with my opinion of what to do regarding the stock.
Now if you are a longer term investor, earnings announcements may not present the same risk to the price of a company's stock. As long as the fundamentals of the company remain strong and the price has not reached or approached the target exit price, you may be willing to hold through earnings announcement. It is important to review the fundamentals of a company before they announce earnings, looking for signs of potential problems.
Earnings Manipulation So do companies manipulate their earnings? Well, I found this study interesting. A University of Illinois economist who analyzed thousands of forecasts of publicly owned companies between 1989 and 1998 found that there was a significantly higher probability for a company to beat the consensus forecast if the forecast was lowered two weeks prior to the announcement. "We document empirically that many firms apparently have ways of lowering the forecasts as the earnings announcement date approaches," said Dan Bernhardt, the UI economist who conducted the study with Murillo Campello, an economist at Michigan State University.
Bernhardt theorized that less experienced analysts were more likely to make late forecasts and were more likely to revise their forecasts than analysts who had covered a company for a longer period. Also there is sometimes a legitimate reason for management to lower expectations, or create "slack." Especially in fast-growing companies, earnings may change dramatically in the weeks or even days before a quarter ends.
Early in my career I worked in the Finance department of a large bank preparing the performance reports for senior management and the Board of Directors. As you may know it is quite easy for banks to manipulate their earnings in addition to estimating taxes owed. Each quarter a bank estimates their loan losses that they will write off as an expense. Estimating this expense is part estimating what real losses and part what the CEO wants the earnings to be. Usually the CEO sought to even out earnings growth by increasing or decreasi
The Project Management Professional (PMP®) certification from the Project Management Institute is the globally recognized standard for project managers. A PMP® certification is often required for new jobs, or it may be a condition for promotion. Taking the next step in your development as a professional project manager requires a commitment of time and energy. Relying on your experience alone won’t be enough to earn the PMP® certification.What to look for when searching for PMP Exam Prep providers: PMP Exam test taking strategySupplemental PMBOK information and exam tipsStudy on critical activities (Network Diagramming, Critical Path, Forward and Backward Pass, etc)Key Formula's and CalculationsSample Exams (Timed and Scoreable exams)Class Discussion Forum (If online course)Assigned PMP Coach (If online course)Unlimited 24/7 Access (If online course)35 PDU'sHelpful Learning Aids:Mind Mapping Tools and Techniques (software included)Memorization tricksAccelerated Learning TechniquesActive & Passive Learning techniquesAbout The PMP CertificationThe PMP Certification is the project management profession's most recognized and respected global credential. There are over 200,000 PMP's worldwide located in over 160 countries. To obtain PMP certification, an individual must satisfy education and experience requirements, agree to adhere to a Professional Code of Conduct, and pass the PMP Certification Examination. The PMP Certification Program supports the global community of project ma
So what are we to make of this sample of earnings releases?
Trading Online Markets' Approach As a trader who holds a stock days or weeks, I have a rule that I will not hold a stock into its earnings announcement. To often the price of stock falls immediately after earnings are announced. This discipline has protected me from incurring losses when a company announced its earnings. It saved me substantial money a number of times. If I am trading short term, I still follow this rule. I document the next earnings date on my Watch List, just to remind me to be aware of when earnings will be announced.
At Trading Online Market's I am willing to hold through earnings if the company's fundamentals remain strong and the stock chart does not indicate any potential problems. First, I recommend everyone read the article by Herb Greenberg, Don't Get Blindsided, available at http://www.marketwatch.com/news/story/Story.aspx?guid=%7bE99E0285-7FBB-41D3-AD7D-C4077119D7BE%7d&siteid= which addresses some of the problems that need to be explored. Herb always takes a critical look at companies and presents a good perspective. In this article he comments on what are some of the issues investors should watch for before earnings are announced. Definitely worth the read.
The companies on my watch list and in the portfolios are those that I believe the market has undervalued and are fundamentally strong. These stocks present buying opportunities at deflated prices. Usually they have pulled back due to overall market conditions, or the sector is out of favor. They may have even experienced some bad news that is temporary. As such I generally hold these stocks through their earnings announcements. In fact, often these companies will experience good earnings and beat expectations.
You should monitor quarterly earnings announcements to be sure the fundamentals are still intact. Should the price pull back to a support level, then it might be a good opportunity to make a strategic buy. If part of the announcement changes your view of the fundamentals of the company, then it is time to sell. If the news is worse than you expected, then it is best to get of the stock, since bad news seems to follow bad news. Every stock is updated shortly before earnings are announced and then again after they are released with my opinion of what to do regarding the stock.
Now if you are a longer term investor, earnings announcements may not present the same risk to the price of a company's stock. As long as the fundamentals of the company remain strong and the price has not reached or approached the target exit price, you may be willing to hold through earnings announcement. It is important to review the fundamentals of a company before they announce earnings, looking for signs of potential problems.
Earnings Manipulation So do companies manipulate their earnings? Well, I found this study interesting. A University of Illinois economist who analyzed thousands of forecasts of publicly owned companies between 1989 and 1998 found that there was a significantly higher probability for a company to beat the consensus forecast if the forecast was lowered two weeks prior to the announcement. "We document empirically that many firms apparently have ways of lowering the forecasts as the earnings announcement date approaches," said Dan Bernhardt, the UI economist who conducted the study with Murillo Campello, an economist at Michigan State University.
Bernhardt theorized that less experienced analysts were more likely to make late forecasts and were more likely to revise their forecasts than analysts who had covered a company for a longer period. Also there is sometimes a legitimate reason for management to lower expectations, or create "slack." Especially in fast-growing companies, earnings may change dramatically in the weeks or even days before a quarter ends.
Early in my career I worked in the Finance department of a large bank preparing the performance reports for senior management and the Board of Directors. As you may know it is quite easy for banks to manipulate their earnings in addition to estimating taxes owed. Each quarter a bank estimates their loan losses that they will write off as an expense. Estimating this expense is part estimating what real losses and part what the CEO wants the earnings to be. Usually the CEO sought to even out earnings growth by increasing or decreasi
In the article Getting Involved in the Global Development Market (available in full in Latest News at www.globizdev.com) I commented that while tendering skills are critical, in isolation of other key activities success is a lottery.Preparation must remain as a key and ongoing activity if organisations and individuals are to expect success from their tendering involvement.While there is no doubt that some of this preparation may require investment if site visits and the like are to occur, as they need to, not all preparation is costly.So often, when working with some of the smaller organisations that seek activity in sub-components of larger projects, the tendering effort is stressful, time- challenged and often without system.This can be managed by planning in advance.As discussed in Getting Involved in the Global Development Market, tender responses, even for sub-components, invariably require details of your team, approach and methodology, management, price and past experience. With the often tight timelines for the tender response, it is critical that time is spent on ensuring the best possible solution to the project’s requirements at the best possible price. Hence, time should be mostly devoted to new thinking, not administrative compilation of past information.There is no doubt that a successful track record of implementing or involvement in similar activities will be assessed and contribute to your success or failure for any tender. But this does not mean taking two weeks to find and compile a list of past experiences is time well spen
Now if you are a longer term investor, earnings announcements may not present the same risk to the price of a company's stock. As long as the fundamentals of the company remain strong and the price has not reached or approached the target exit price, you may be willing to hold through earnings announcement. It is important to review the fundamentals of a company before they announce earnings, looking for signs of potential problems.
Earnings Manipulation So do companies manipulate their earnings? Well, I found this study interesting. A University of Illinois economist who analyzed thousands of forecasts of publicly owned companies between 1989 and 1998 found that there was a significantly higher probability for a company to beat the consensus forecast if the forecast was lowered two weeks prior to the announcement. "We document empirically that many firms apparently have ways of lowering the forecasts as the earnings announcement date approaches," said Dan Bernhardt, the UI economist who conducted the study with Murillo Campello, an economist at Michigan State University.
Bernhardt theorized that less experienced analysts were more likely to make late forecasts and were more likely to revise their forecasts than analysts who had covered a company for a longer period. Also there is sometimes a legitimate reason for management to lower expectations, or create "slack." Especially in fast-growing companies, earnings may change dramatically in the weeks or even days before a quarter ends.
Early in my career I worked in the Finance department of a large bank preparing the performance reports for senior management and the Board of Directors. As you may know it is quite easy for banks to manipulate their earnings in addition to estimating taxes owed. Each quarter a bank estimates their loan losses that they will write off as an expense. Estimating this expense is part estimating what real losses and part what the CEO wants the earnings to be. Usually the CEO sought to even out earnings growth by increasing or decreasing the total amount of loan losses written. This allowed the bank to meet and usually beat expectations.
Is this earnings manipulation? Possibly. Like so many things in life some definitely do manipulate their earnings and some are quite honest. Unfortunately accounting allows a fair amount of leeway in the interpretation of rules. Also, management tries to present the company in its best light. So, as investors we need to read the earnings release with a critical eye, looking for issues that may indicate problems.
All this tells me that companies do adjust their earnings to try to exceed expectations. Most also try to stay within the accounting rules. However, I believe that the market is usually aware these efforts. As a result when they finally announce earnings that either meet or slightly exceed expectations, the stock is punished. A company must dramatically beat expectations before the price will jump up.
Conclusion In conclusion, earnings season presents each investor with new challenges. Do the earnings of the company match up to expectations. Is the chart of the company indicating any potential problems? Do I hold through earnings announcements? Do I take advantage of any announcements and buy? The best way answer these questions is do your homework and to follow your discipline. It will keep you aligned with the best opportunities.
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