Earnings Releases | Street Talk | Dix & Eaton

Huh?!!?!!

Listen… I’m not looking to get anyone in trouble or make fun of anyone… but read this lead quote from a recent earnings release and tell me what it means (Note: I’ve modified it to protect the guilty):

“Fiscal 2010 has been a year of significant progress at (company), as we have been completing the development of numerous strategic initiatives that are being implemented over the coming year,” said (El Taco Grande). “These initiatives, which are designed to enhance the (customer) experience, expand (customer) protections and ensure… (they) succeed in our programs. These initiatives will present new challenges for the Company in the year ahead, but they are the right things to do for our (customers) and they will better position us to succeed as an organization over the longer term.”

Ummmmm… what?!!? I’ve read this quote - which is the second paragraph in the release - no less than eight times in a row and have no idea what it says. What progress? What strategic initiatives? What challenges? What will success look like? How long is longer term?

Maybe I’m wrong but I always thought earnings release should answer questions, not beg them. Perhaps this is the evidence we need to finally liberate IR from the finance department and return it to the communications function it was intended to be.

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Look Beyond Earnings

Wanted to pass along a GREAT read from Accounting Financials and Taxation. While it is geared towards helping investors evaluate investment opportunities, it is a timely reminder to management teams of public companies to provide meaningful insight into the strategies and intangible assets that drive financial/operational results and fuel future growth opportunities. This applies to earnings releases, IR Web sites, non-deal road show presentations, etc. Remember, the numbers cannot speak for themselves.

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