Originally posted by deepinsight TV18/NW18: While earnings were dissapointing - topline was actually quite encouraging. These kind of business models have a long enduring cash generating ability and growth trajectory in front of them.    On a broader sense: Negative QOQ trends can actually give warning for detoriating businesses or business models - and can be invaluable decision tools to protect capital or add to a position if one percieves it as short term in nature.   It could be interesting to focus on what variables to focus onon QOQ basis for that particular business to monitor -for value creation and risks.   This quarter results has quite clearly underlined the detoriating external conditions for exporters (IT services companies, Pharma, Gems, Garments) because of the rising Rupee against the USD.  Now some companies are handling this challange better than others - but some companies may not be able to cope with this new challange.   Every quarter (even for many of us who are long term investors)  one has to take the numbers and decide - to sell, do nothing or buy more - we hope that usually the outcome is do nothing or add more.

This guy writes very well have met him once also. Was a very frequent writer in ET during the 90's and all his articles made tremendous sense. Prepares and designs annual reports right now spart from writing articles and occassionally popping out from the Idiot box.

Some of the companies are quite interesting....I know of seshasayee....this company has made a big turnaround sort of with the commissioning of power plant....I remember I had a talk with one of the fund manager i know and he said BILT is better than seshasayee and although I am quite impressed with gautam thapar's performanec as MD in other companies but the overhang of FFCB conversion price at less than book value is something I am unable to digest with ballarpur. And we had a very decent debate on seshasayee vs. ballarpur. both are lovely stocks and ballarpur has stolen some thunder by coming up with this scheme of rearrangement although on an absolute basis I have managed to beatballarpur with seshasayee. india Foils is a true mungeri case....I remember when i sold India fouils some time back @ 22-23, the very next day there was a news item in ET that there was  a big hunt for this company and there are at least 25 suitors. I even rememeber some people looking at its annual report and comparing it with Hindalco's and coming with a swap ratio. Some even had the imagination to say that it will first be amalgamated with Indal and subsequently that will be merged with hindalco. Naveen Fluorine has always been a decent bet....a big winner of carbon credits....Suzlon never inpired any confidence to me and the results come as no surprise....Shree renuka was surprising but i will rather like to go with an eid parry's at  108-110 levels...

Quarterly earnings guidance - good or bad?

Earnings guidance are forward-looking statements provided by a company’s management to the public on what it expects the company will do in the future. The three most significant benefits of earnings guidance include satisfying requests from investors and analysts; maintaining a channel of communication with investors and intensifying management’s focus on achieving financial targets. However, it appears that short-term earnings guidance has resulted in short-termism, with cost outweighing the benefits. This is accentuated by a recent survey of 400 financial executives, in which 80% indicated that they would decrease discretionary spending on areas such as R&D, advertising and hiring to meet short-term targets and more than 50% said that they would delay new projects even if that meant sacrificing value creation. In corporations, these costs are manifest in the practice of deferring investments and liquidating assets to enhance reported quarterly earnings per share. The insights of the panel confirmed what the academic research suggests: namely, that the obsession with short-term results leads to the unintended consequences of destroying long-term value, decreasing market efficiency, reducing investment returns and impeding efforts to strengthen corporate governance. Other than leading to short-termism and huge pressure, companies are discouraged from providing earnings guidance because of threat of litigation and loss of reputation. Warren Buffet encouraged management teams to place their attention and focus on long-term strategy, not quarterly earnings.    Subsequently, companies representing significant Berkshire holdings, including Coca-Cola, Gillette and The Washington Post Company, ceased providing quarterly earnings guidance and instead opted for annual guidance. More recently, Intel, Citigroup, McDonalds, Motorola and Pfizer stopped providing quarterly earnings guidance. This is aptly rounded off by John C Bogle, founder and former CEO of The Vanguard, that “the role of management should not be beating abstract numeric estimates, but improving the operations and long-term prospects of organisations.” A blanket ban on forward looking statements and earning projections would be detrimental to the interest of shareholders. Certainly, care needs to be taken that companies do not issue excessively optimistic growth targets or deliberately lower expectations so that they can beat the target later.