Whisper numbers are a weird animal on Wall Street, especially when you're talking high profile earnings reports like Google,Apple,Yahoo,Microsoft, Intel and so many others.
Believe me, I know what I'm talking about because as a financial reporter at a major financial news outlet, I sit squarely between two competing camps of whisper number rivals: EarningsWhisper.comand WhisperNumber.com.
Coke and Pepsi, HD DVD vs. Blu-ray, Fox Business and CNBC, and these two websites. Rivalries don't get bigger or more bitter than these. EarningsWhisper bills itself as the Street's "only major provider of REAL earnings whisper numbers," and "proven by independent research to be the most accurate source for earnings estimates, and more importantly, have been proven to affect short-term prices more than consensus earnings estimates." WhisperNumber.com has been around since 1998, six months before EarningsWhisper, with tens of thousands of registered members and says it is the more accurate source of this kind of data.
Why the controversy? Both camps claim an almost insider knowledge of Wall Street's "real" expectations, despite published consensus numbers that might show something different. Whisper numbers, such that they are, are an imperfect science that rely almost as much on "feelings" and "emotions" and investor opinions surrounding a company as they do on the more black-and-white, cut and dry channel checks, market research and executive commentary Wall Street analysts use.
This has come up recently because last week I included whisper number data in some of my earnings coverage of Intel, eBay and Google. The numbers I used came from WhisperNumber.com, and the folks at EarningsWhisper fired off an angry note to me, questioning the integrity of my coverage, calling it "misinformation," and "incorrect." Which of course I take issue with.
WhisperNumber gets its data from its 50,000 subscribers, and then comes up with an expectation -- a whisper -- of what real investors "actually" expect, versus the published consensus number the Street is looking for. Sometimes they're the same, but mostly they're not. WhisperNumber's John Scherr tells me he gets expectations from individual investors, his software trolls message boards, press coverage, chat rooms, and takes into account the opinions of visitors coming to the site who can add their voice to data. Whisper numbers are typically the numbers investors are actually looking for and whispernumber.com says it gets its numbers from those investors.
Earningswhisper's Shannon Puls says her site has 150,000 subscribers, and says the site cold calls analysts, reads every earnings preview and published research reports, regularly checks in with regular traders, quoting analyst names and companies when possible "for transparency." She takes the Intel news as the best example of just how wrong WhisperNumber was. WhisperNumber said the Intel whisper was 28 cents, and when the company reported 25 cents, shares actually went up, Puls wrote me, adding that Intel's better than expected guidance lifted shares. Not the whisper number.
She also hit me for citing WhisperNumber's 40 cent number for eBay, a penny above consensus. Yet EarningsWhisper pointed out that there would be an additional two pennies from favorable currencies. When the company beat by 3 cents, as EarningsWhisper projected, shares went down because the company failed to meet Street guidance expectations. eBay shares declined because the company's core auction business and active new users failed to see any noticeable gains. EarningsWhisper or WhisperNumber aside, as you can see, there's plenty of room for opinion to play a big role here.
Puls' argument weakens when talking about Apple, since WhisperNumber is looking for $1.08. She tells me to call around and talk to analysts, "like we do, and ask them what they expect." Thomson, for one, says the consensus -- the average -- is $1.07. By definition, some analysts are above. Some below. And some right on. And if it's helpful, Andy Neff at Bear Stearns and Mike Abramsky at RBC Capital are both at $1.08. I've seen as high as $1.18. The range is 94 cents to $1.18. Starmine, by the way, another of the "consensus" providers, at $1.09, which is an even bigger upside than WhisperNumber.com's potential upside.
Meantime, I get email periodically from those of you wondering about whisper numbers and why I choose one site over another. I'm hoping to get data from both and I'd be more than happy to include numbers from each. A word to the wise investor: Consider the source, understand the data, ask where it's coming from, and make an informed choice. I report these numbers because they're "out there," being discussed. Both sites offer interesting data. Who to believe, when, and how deeply is up to you, the savvy, knowledgeable investor.
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