February 18, 2008

Rogue Conference-Caller Frustrates World of Finance

THE MARKETS MAY be closed due to the Presidents' Day holiday -- somehow, that seems fitting -- but that doesn't mean there aren't financial-related happenings to blog about. For instance, consider this story in The Wall Street Journal, which details how a rogue conference caller -- one Mr "Joe Herrick" of "Gutterman Research" -- is causing havoc with executives and analysts alike. Apparently, Mr Herrick has been worming his way into these calls, and then asking executives silly questions laden with jargon. To their credit -- I guess -- the executives actually try to answer the questions, although I think it'd be pretty cool if they said something to the effect of, "What kind of idiot question is that?"

I learned about this story from my friend Matt, who found it hilarious and sent me a nice note asking if I was in fact Mr Joe Herrick of Gutterman Research. I can assure Loyal Rant Readers that I am not. Even though I am very interested in business and finance, and have listened to conference calls in the past, I don't have the mental fortitude Mr Joe Herrick does. This is because after listening to 45 minutes of presentations from a company, my brain hurts and the only response I can muster up is a shout of "Nice doggie! Froyn-LAVEN!"

However, I do think Mr Herrick could improve his performance on these calls -- and cause even more trouble -- if he did the following:

* Instead of talking about Six Sigma or capital savings, ask a question using the Four Unspeakable Words of Business. That will surely get the executives' feathers ruffled. What are the Four Unspeakable Words of Business, you ask? "Long Term Compensation Expense."

* Focus on suspect new product launches and other endeavors with the simple query, "What the hell were you guys thinking?" This would work especially well with food and beverage companies, and particularly with Cadbury Schweppes PLC, which recently introduced "Diet Dr Pepper Cherry Chocolate." What's up with that? Cadbury Schweppes PLC does NOT need to screw around with Diet Dr Pepper, which tastes like regular Dr Pepper.

* Formulate questions based on the reductio ad quantum principle, in which any development is contrasted negatively with the company's falling stock price, and answers demanded as a result.

* Openly declare suspect guidance or numbers as such. Bonus points for using the phrase "I call bullshit."

* Complain about the company's paltry dividend or entire lack thereof.

* Demand to know what football teams to which the executives proclaim allegiance. You can tell a lot from that. For instance, if they're Raiders fans, that's a clear sign to sell. If they're Bengals fans, you can expect continued underperformance for years to come. If they're Patriots fans, though, that might be a sign to buy shares, because clearly they're ruthless and cunning and will stop at nothing to achieve their goals.

* After receiving a long and complex answer from a well-meaning executive, shout "Bingo!"

Anyway, Mr Herrick, you're welcome, I'm sure. For my corporate readers -- if I have any -- grinding their teeth, I would encourage you not to take offense, but rather consider this an important preparation document. After all, someone will ask you about these things eventually, so you may as well be ready.

Posted by Benjamin Kepple at February 18, 2008 10:24 AM | TrackBack
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