February 8, 2016

21 More Earnings Release Pet Peeves!

Recently, I ran a popular blog listing 31 pet peeves about earnings releases. In response, a number of folks sent in additional pet peeves – including Foley & Lardner’s Pat Quick and Morgan Lewis’ Alan Singer – so here are 21 more:

1. Inappropriately mixing first & third person (“the Company” and “we”).
2. Conflating use of percent & percentage points.
3. Misuse and overuse of the verbs “drive,” “leverage” and “grow” – and variations of those terms.
4. Describing something as “growing” or “increasing” (i.e. a continuing event) when the data or evidence are historical (support only “grew” or “increased”).
5. Inadvertently issuing an earnings release early.
6. Having a bracket/change/comment from earlier draft seeping into the final.
7. Failure to update the forward-looking safe harbor.
8. Word typos. My favorite is when “Chief” is misspelled “Chef.” Spellcheck doesn’t catch that. Fortunately, for the company I knew that it happened to, the “Chef” Executive Officer loved to cook so she found it amusing (that one and only time).
9. Classic typo is putting in the wrong phone number for the conference call. Somehow the 800 number (that should have been entered as 888 or something similar) often turns out being an inappropriate hotline.
10. Bad numbers – the right people did not check them carefully enough, including showing “millions” as “billions” or vice versa.
11. Not owning up to a mistake. If there’s a mistake of consequence in the earnings release, the CEO/CFO should address it in the prepared remarks on the earnings call. And putting out a corrective earnings release is a tough pill to swallow, but it needs to be considered.
12. Management statements that a component of company results were “within management’s expectations” or “exceeded management’s expectations,” when no prior public forecast of the component was made.
13. Highlighting good news & burying bad news, particularly from one quarter to the next (one quarter, matters about ‘X’ are good news & in the headline; the next quarter, when all about ‘X’ is bad, there is no news about ‘X’ or the news is buried).
14. Always stating something is a “record” performance, each & every quarter.
15. Using performance measures in press releases that ultimately will not find their way into the 10-Q/10-K such that the release & disclosure filing seem to be talking about two different things.
16. Identifying something as a key performance measure one quarter & then not addressing that measure in subsequent quarters.
17. Explaining results from the quarter in present tense such that the statement seems to apply to the quarter that is in progress (“We are growing sales of our widgets” rather than “We had higher sales of widgets in the 3rd quarter”).
18. Do quotes really serve a purpose? They are often nonsensical.
19. Inconsistent guidance practices, such as changing measures from quarter to quarter or switching from annual/quarterly guidance to “long-term guidance.”
20. Over-promising & under-delivering (with respect to guidance) and then trying to explain it.
21. Not listening to the investor relations team (relying on the lawyers too much). But sometimes the converse is the problem.

Transcript: “The Latest Developments – Your Upcoming Proxy Disclosures”

We have posted the transcript for the recent webcast: “The Latest Developments: Your Upcoming Proxy Disclosures.”

Cap’n Cashbags: Fakes His Own Death

In this 50-second video, Cap’n Cashbags fakes his own death to avoid giving a raise to a long-time employee. Stick around til the end for a dog clip:

Broc Romanek