Two-Way Street

Earnings ... Is That Really the Right Number?

You reader folks don't see it, at least I hope you don't, but every so often a simple earnings number can set off a mad scramble in the newsroom.

We had a couple of those instances in the last week.

Usually the earnings play book is pretty simple ... you get the number, compare it to the analyst consensus estimate, and blast out the news: beat, meet, or miss. Easy, right? Unless, of course, the earnings number includes things the analyst estimate didn't consider. Then it gets tricky.

Take Microsoft's earnings yesterday. The number comes in ... 74 cents a share! A 15 cent "beat" over the analysts' 59 cents a share estimate! But wait ... that number from Microsoft includes deferred revenue. Strip that out and the number is 60 cents a share. .... more like a "meet." So the question becomes, did the analysts allow for deferred revenue or not? (Newsroom flurry of calls and debate ensues. Ruling ... use the 74 cent comparison).

A similar scramble happened Monday with the Apple results. Turns out that its profit number from a year earlier wasn't comparable with the most recent quarter's earnings—still following me here?—because of an accounting rule change related to the iPhone. But which set of rules were analysts going by? And what about comparisons to previous results? (Luckily for us, Jim Goldman was on top of it).

And then there was Ford . It had a before-tax and after-tax number on the profit side. That had to be sorted out. And I'm probably forgetting a couple lesser ones.

These situations are journalistic hell. You know your readers want the numbers ASAP. The shelf life of this news is practically nil. Yet you don't want to give the wrong information.

In the end it is better to be slow and right than fast and wrong. So if you are wondering why a certain earnings number isn't jumping up on our site right away ... now you know: We're probably scrambling.

Get all the numbers at Earnings Central.