The WSJ.com ASIALINKS alert excerpts a piece on earnings guidance, which contains interesting statistics:

Between 2001 and 2006, Standard & Poor’s 500 companies that issued guidance beat analysts’ expectations 65% of the time, while companies that didn’t issue guidance beat them 63% of the time, according to a recent report from Thomson Financial.

It can be tough for individual investors of those firms that report earnings and comment on current and future quarter (year) guidance. An earnings beat is almost meaningless if guidance for the next quarter or for the year is cut. However, an earnings miss can be overlooked if there is raised guidance and sometimes if there are merely optimistic comments by executives, such as “margins are seen improving.” Guidance certainly leads to short-term volatility, favoring traders and potentially hurting long-term investors if they are compelled to reduce/exit positions. However, at least with Reg FD there is a more level playing field, although not always, as there was a recent case involving Office Depot in which its IR apparently tipped off analysts of coming weakness, sending the stock lower, before individual investors ever knew. Not cool!