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29-Apr-2006
Thoughts on Restructuring and Meetings, by Victor Niederhoffer

It was regrettable to see the use of alliteration in Intel's analyst day talk where CEO Paul Otellini pledged to "restructure, resize, and repurpose Intel for the future". It has been anecdotally noted on this list that alliteration by corporations often is the signal of gilding the lily and fuzziness and decline.

Intel had its biggest percentage rise in five months on analysts days. I would speculate that analysts days in general are bullish as the recent Google one was, as the companies store up their good stuff to unload on analysts day as we all are prone to do when we have big meetings or the attractive "other" is in the audience.

There seems to be a standard way now of getting the stock of big companies up, go to a meeting and announce that they are taking a fine tooth comb and razor to every aspect of costs in the company and firing workers galore. Amazingly, I hold just a handful of individual stocks, and I have been victimized first by falling profits and then given a temporary reprieve by this message in the last year in a high percentage of the stock I've owned, Pfizer, IBM, and Intel among others. Somehow I believe this formula for goosing the stocks is rather ineffectual over a long term basis as it always seems that the cost savings involved are far smaller than the write-offs that are necessary to accomplish it. Someone should investigate this new tool of the CEO systematically and write a Harvard Business Review article on it as an adjunct to their consulting business which it seems is the unstated purpose of most HBR articles.

The whole subject of the performance of companies before and after meetings should be fruitful. Information and reduction of uncertainty is costly and after these meetings there is much more to base an analysts report on. It would stand to reason that there should be a spate of analysts reports after such meetings, and indeed I have noticed about 10 times the relative frequency of same after such meetings than before. Since most analysts reports are still favorable, one would suspect that meetings should be good.

There are some three hundred thousand entries on Google for various permutations of meetings, NYSE, NYSSA (New York Society of Security Analysts), et al. And services such as Bloomberg list hundreds of meetings each week under NI meetings. As far as I know, however, no systematic study of such meetings has been made in recent years, except for this lone effort by a collaborative pair.

One would hope that there would be many meals for a day in the pursuit of this subject.

 

 

 

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