Page 258 - Executive Warfare

EXECUTIVE W ARF ARE

strategy that I had to point out to him that the sign onstage said this was
a Q&A, not a debate. I’d answered his question and a few follow-ups, and
now we were done.“If you own our stock, I’d advise you to sell it because
you are so unhappy,” I added.
The truth is that people want to own the stocks of companies that are
run by leaders. Not by people who are afraid of analysts, not by people
who are temperamental and blow up at them, but by people able to show
some composure when questioned.
The one thing you must never, ever do with analysts is succumb to the
pressure to meet their consensus earnings estimates for your company.
This consensus represents one of
the more counterproductive ways Wall
PEOPLE WANT TO Street tries to influence public compa-
OWN THE STOCKS nies’ managements. The number is a bit
OF COMPANIES like a fruitcake assembled without a
THAT ARE RUN BY recipe. Nobody is quite sure how much
LEADERS. NOT BY candied lemon peel is in it.
PEOPLE WHO ARE The people who contribute to it are
AFRAID OF inevitably a mixed bag. There may be
ANALYSTS, NOT BY 30 analysts following your company, of
PEOPLE WHO ARE whom only 40 percent will follow you
TEMPERAMENTAL closely and actually do the analytical
AND BLOW UP AT work to evaluate you.
THEM, BUT BY The other 60 percent follow you only
PEOPLE ABLE TO enough to write generally about you
SHOW SOME and to offer an annual consensus num-
COMPOSURE WHEN ber. Yet they are also eligible to partici-
QUESTIONED. pate in the average—with their annual
numbers prorated for the quarter.
In addition, these estimates are by no
means always the analysts’ best guesses. An analyst may make his or her
earnings projections deliberately high, knowing full well that you won’t

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