Why a Company's Stock Falls Even After Positive Earnings

By: Reuters

While a majority of companies have reported better-than-expected profits in the current earnings season, a few key firms have missed their "whisper number," a metric that is similar but considerably tougher to beat.

A trader at the New York Stock Exchange.
Missing the whisper number has been a factor in the market's inability to maintain its recent positive momentum, analysts say.

Whisper numbers, according to www.WhisperNumber.com, the financial research firm that publishes the data, are unofficial estimates for corporate earnings. They are based on such metrics as fundamental research, past performance and "gut feel," and the numbers are often higher than analyst consensus estimates, making them harder to surpass.

"It would be too much to put all of a stock's movement on a whisper number, but I would say they're more important than consensus expectations," said Christopher Zook, chairman of CAZ Investments in Houston, Texas.

Perhaps the most notable example of a whisper number's influence in the current season is International Business Machines.
.
On Jan. 19, the tech giant reported fourth-quarter earnings of $3.59 a share, above the consensus expectation of $3.47 but below the $3.76 a share whisper number. After rising in anticipation of the results, IBM fell after they were released, pressuring tech stocks.

"IBM is a clear example of whisper numbers being more important than consensus estimates," said John Scherr, president of WhisperNumber.com, in Sparta, New Jersey. "Expectations move markets, and whisper numbers are information based on expectations rather than estimates."

While few doubt the influence whisper numbers have on share movement, some question how credible the numbers are, as they can be used by traders to talk up their own positions.

-----------------------
Traderone: Now we have to listen to the whisper numbers too? So the information that is released to the market is not so true after all. Can analysts give a disclaimer that the information released is true, fair and LOUD. No whisper please!!!!!!