Companies Reduce Quarterly Earnings Guidance
A recent survey from the National Investor Relations Institute ("NIRI"), accessible at http://www.niri.org/irresource_pubs/alerts/ea050330.cfm, shows that more companies now offer less guidance, and that companies are moving towards the practice of annual guidance rather than quarterly guidance. Some companies believe that providing guidance is important for maintaining analyst coverage, and that analyst coverage is important for attracting institutional investors. One problem with providing guidance is that once you provide it you may have an obligation to correct or update it. For a small company, one major customer win or loss could radically change the results for a quarter. By omitting quarterly guidance, the company does not have to worry whether events are material enough to merit additional guidance.
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