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Going Dark

When a few large public companies decided in 2002 and 2003 that they would no longer provide quarterly earnings guidance, many analysts dismissed it as a fringe phenomenon among a few companies that consistently had trouble hitting their numbers. But while this phenomenon didn't create a sea change in disclosure practices, it grew into a relatively small but important trend.

"There has been a movement away from quarterly earnings guidance for several years now," says Mark Perlow, a partner with Kirkpatrick & Lockhart Nicholson Graham in San Francisco, and formerly an SEC senior counsel. "Many companies, particularly larger and more seasoned issuers, have concluded that quarterly earnings guidance was making their stock more volatile rather than less."

"What we are complaining about is not just the emphasis on quarterly results, but continual management attention on predicting results and then managing toward those numbers," says David Chavern, director of the U.S. Chamber of Commerce's corporate governance initiative.

Ceasing to offer quarterly earnings guidance, however, isn't a popular step with analysts and investors who want more information from issuers, not less.

"I wouldn't read the Siebel decision to mean now there's more play in the joints, and we can back off Reg FD compliance," Quinlivan says. "Instead it means the SEC should interpret Reg FD in a commonsense way, and shouldn't build in gotchas for issuers."

Seeking Safe Harbor


Michael T. Burr

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