CONFERENCE CALLS: PROVIDING INSIGHTS INTO QUARTERLY EARNINGS

A conference call, open to all investors, provides an avenue for companies to report its quarterly and/or projected earnings. The event is divided into two parts: management report and question and answer portion. Corporations enter a quiet period, which opens at the end of each quarter and closes upon the issuance of earnings and press release, in which they are prohibited from divulging any details not yet reported.

Before their conference call, firms release quarterly earnings which cover the following: business environment, financial results, and operations from the previous quarter. This report uses a backward approach as it looks into the reported numbers in the preceding quarter. Companies made the quarterly earnings available to the public by posting it on their website or sending a press release to media companies. That way investors can evaluate the figures and compare the past and present data.

There are (at least) three participants in a conference call: the chief executive, the chief financial officer, and investor relations. Senior employees participate in some instances. Different companies have different program flow or format for holding such a call. The CEO outlines operating results and comment on the industry and operating environment. The CFO explains profoundly their quarterly earnings and all the items in the financial statement. Investor relations introduce the executive team members who partake in the event and answer queries regarding the reported earnings or other important matters.

The question and answer portion covers all inquiries pertaining to a firm’s strategy and vision, prospects, current and/or upcoming industry and operating environment, and new products and services, if any. Investors can seek clarification on parts that were not thoroughly discussed during the management reporting.

Investors should trail conference calls in order to ensure the soundness of their investments. Crunching the numbers and relying on other tools are not enough to gauge the overall health of a company.