Stock Analysts Intimidated - Boy Did the Times Miss this One

It took the whole article for the Times to get to the bottom line.

Stock "analysts," employed by brokerage firms which sell stocks generally, and may have a financial stake in some of the those companies, are basically shills. Taking their advice is like taking the advice of the "Used Car Sales Journal." The parent makes money on people buying.

The analysts bow down to abuse and threats, not just because of the above conflict of interest, but because the inside scoop to them makes interesting articles like a locker room interview for a sports writer, or background slime from a White House insider.

Finally, at the end, we get the answer as a throw away line. Because pay for exectives is bound up in the stock price, their view is that the product of the company is not cars, or computers, but the stock. For them, anything which pumps the stock in the time they can dump it later, is the plus.

In someone's immortal words, about the auto industry, "A car is a dollars way of making another dollar."

Gretchen Morgenson
You'll Never Do Research in This Town Again

Published: July 31, 2005

...Last Tuesday, in a highly unusual move, Tad LaFountain, a veteran semiconductor stock analyst at Wells Fargo Securities, said he was dropping coverage of the Altera Corporation because its management had stopped talking to him and would not let him ask questions during conference calls. Mr. LaFountain's sin? Questioning whether the company's costly share buybacks used to offset piles of stock options were a good use of shareholders' cash.

...
Why, when faced with analysts who do their jobs, do some executives lash out? Who could possibly want to follow in the footsteps of Jeffrey K. Skilling, the former Enron chief executive who spat an expletive at an analyst on a conference call six months before the company collapsed? Isn't it better to be the model of professionalism when trying to persuade an analyst that he or she is wrong?

It's possible that these guys are equal-opportunity bashers, treating the analysts who follow their companies the same way they deal with everyone else around them. But another reason for this oddly aggressive behavior may be that many executives, especially in Silicon Valley, are more concerned about managing their company's stock price than managing their company.

Whatever the reason, there really is no excusing this kind of thing. C'mon guys, get a life.