INSIDE TIPS
It's not enough to find a killer stock. It's not enough to see returns of 70 percent per year. No, when it comes to Wall Street, everybody wants an inside tip. How else to explain the fervor for whisper numbers?
A whisper number is an estimate of a company's quarterly earnings - usually expressed in price per share - believed to be more accurate than the target published by analysts in their official research reports. Since newly public technology companies, especially dot-coms, can't be evaluated by the usual price/earnings ratios, quarterly earnings has become a closely watched metric.
Whisper numbers spread among analysts via word of mouth. Lately, they've been appearing on Web sites such as WhisperNumber.com, StreetIQ.com, and EarningsWhispers.com. But investors who think they're getting the skinny need to know what's behind these figures - in a word, nada.
A case in point: During the first quarter of Oracle's fiscal year 2000 (June through August 1999), First Call's consensus of Wall Street analysts expected the company to earn 16 cents per share. But the same experts whispered a different figure to favored clients: Oracle, they said, actually would make 18 cents per share. Banking on an upside surprise, big-time money managers piled into the stock just before the September 14 earnings announcement.
When Oracle revealed it had earned 16 cents per share on $1.98 billion in revenues, fund managers dumped the stock. It fell 2 3/4 per share the next day, and Oracle lost $3.9 billion in market capitalization. Oracle did blowout business during the quarter in question, but the stock got creamed for failing to match the unrealistic expectations whipped up by Wall Street's numbers game.
But it gets worse. Whisper-number Web sites don't have access to any exclusive information beyond numbers entered by visitors, or fanciful measures such as "IPO whisper numbers."
Here's the real inside tip: Wall Street keeps its secrets to itself.
- Cory Johnson (cjohnson@thestreet.com)
WhisperNumber.com: www.whispernumber.com
StreetIQ.com: www.streetiq.com
EarningsWhispers.com: www.earningswhispers.com
NEW MONEY
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Dot-Commodity Exchange
Sighs and Whispers
