Corporations conduct conference calls with investors and the media every quarter following the release of the company's earnings report. The call is usually open to anyone. The call usually involves corporate leaders explaining their revenue, costs and company forecast, also known as guidance.

Significance

The earnings conference call informs the market on the company's financial state and what the company plans to do to improve its financial condition for shareholders. Guidance is usually expressed in earnings per share. If the company beats its own forecasts the following quarter, the stock price will likely surge on the news.

Time Frame

The guidance call may be separate from the initial earnings announcement or conference call. Many times, guidance is included in the earnings call, which is usually the morning or afternoon of the earnings release. The actual call may last an hour or two.

Features

Guidance is a benchmark for economic speculation. It usually focuses on net income and can also offer insight on upcoming manufacturing orders and service contracts as well as overall industry outlook, inventory and costs.

Effects

The guidance call can have an instant powerful impact on the company's stock price, which is why many companies choose to make earnings announcements and conference calls outside of regular market hours, as in pre-market and after hours trading. Guidance is a key metric that big market players use to increase or sell off shares.

Benefits

Listening to the guidance call gives investors a chance to evaluate their investment. If guidance is disappointing to big institutions and the stock starts selling off, it's a red flag for investors, although sell-offs also attract new buyers. Strong guidance reassures investors their capital can grow.

Source:

Apple Q4 Results: Another Big Quarter, by MG Siegler, TechCrunch, Oct. 19, 2009

More Information:

Alliant Energy 2009 Financial Guidance Conference Call

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