Roy Chastain

From: Laurie Frederiksen <laurie@bivio.biz>
Subject: [club_cafe] It's Earnings Season!
To: "The Club Cafe" <club_cafe@bivio.com>
Date: Tuesday, October 18, 2011, 8:14 AM

I don't know about you but I look forward to the quarterly earnings season.  It's the time to "check in" with the companies whose stock I own and see whether the fundamental judgments I made about their sales growth and profit margins are still valid.    I listen carefully to what they have to say about their results and I also listen to how they're saying it.

I think listening to the actual quarterly conference calls is very informative.  First of all,  if you do it every quarter,  you start to get a much  better feel for the cast of characters who is running the company.

Second,  I pick up a lot from tone of voice and even choice of phrases.

When companies are really doing well,  they don't need long explanations about how to adjust the GAAP reported earnings. They also don't spend their time giving you sales pitches about some new idea they have come up with to get them out of whatever hole they're in at the moment.

As you probably know by now,  I currently really like and own Apple.  I think they must have set a record for saying the word "delighted" in their last quarterly conference call.   That's not a metric most financial analysts measure but who knows?  Maybe it shouldn't be dismissed as insignificant.

Of course, the call today will probably be more somber in respect of Steve Jobs.    It's at 5PM ET (2PM PT) and should be very interesting to listen to.  (Which anyone can do by going to their Investor Relations page on their website)

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To me,  comparing their results to the judgments I'm using to project their future growth is like watching election results,  the score in a sports match or the ending bids in an Ebay auction.   You're never quite sure what will happen and it is fun to see if you guessed right.

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Laurie Frederiksen