Tuesday, January 29, 2008

Close But No Cigar

The kind of thing that strikes you as interesting if you are reading a new book about linguistics (pictured right) while keeping tabs on Wall Street's assessment of Amgen Inc.'s prospects going forward: what exactly does "close" mean?

Amgen surprised Wall Street by announcing at the JP Morgan conference that its full year 2007 earnings per share would end up "close" to the low end of its initial forecast of $4.30-$4.50 for the year. After a dismal year of regulatory and commercial setbacks, including the company's first ever layoffs, analysts did not expect the company to come near to hitting those numbers.

They dutifully revised upward their projections for the fourth quarter--but Amgen still beat their consensus when it reported earnings of $4.29 per share for the full year. That is as close as you can get to the initial baseline forecast of $4.30, right?

That at least is how it looks to people who follow the company closely.

But not everyone sees it that way. At least one Wall Street observer--a reporter for CNBC--looked at Amgen's JP Morgan announcement and read it as if the guidance itself were still in force, and Amgen's prediction of coming close to the low end as a warning that it would be in the $4.31-$4.35 range. So $4.29 per share was a disappointment. (Check out this exchange between a CNBC reporter and Amgen.)

Guess you've got to pick your words carefully....

No comments: