Keep Your Eye on Those Quarterly Profit Reports

To the casual observer, quarterly revenue reports might appear to be simple statistics. But to company officials and their shareholders, the figures can be critical to financial success or failure.

Just ask the folks at Amgen of Thousand Oaks. When the biotech giant reported its quarterly earnings at the end of last month at 51 cents per share, it was initially misinterpreted by one organization as falling 7 cents below Wall Street expectations.

In fact, it was a 32% increase from the 39 cents for the first quarter of 1995, and it was equal to or a penny above various analysts’ forecasts.

Although Amgen received less than a dozen calls from curious investors in this instance, company spokesman David Kaye said a negative report can have a serious impact on stockholder perception.

“Particularly to a biotech company, reports are enormously important because biotech, by its nature, is very speculative,� Kaye said. “Earnings reports are commonly looked to by everyone from Wall Street analysts to Mom-and-Pop investors as a barometer of how well a stock is doing.�

Along with results of clinical trials, business acquisitions and other news-making events, he said, earnings reports can cause a swing in the share price.

“Information is the name of the game,� said Larry Forsman, manager of the Oxnard branch of the A.G. Edwards & Sons investment firm. “Quarterly reports are probably, of all reports, the main ones that analysts and stockholders and buyers look at.�

Analysts’ predictions, when compared with actual results, he said, can have a great influence on shareholders.

“For some companies that are followed by analysts, it is the analysts’ job to predict future earnings,� he said. “If those predictions come true, or earnings are better than predicted, it’s normally a bullish time for the stock. If not, it’s a bearish time for the stock.�

Rich Levin, vice president and chief financial officer of Simi Valley-based Whittaker Corp., said the high-tech industry also can be swayed by quarterly reports.

“The high-tech industry is very volatile--computers, networking, Internet companies,� he said. “[Investors] watch the quarter like a hawk. If it looks like it’s going to be an off quarter, the stock can plunge 20% to 30%. If it looks like [a good] quarter, it can go up 10% to 20%, maybe, over a week.�