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Anyone who reads this column knows we love analysts – their insights, their metrics and, sometimes, even their analyses. Nary a week goes by without our proffering at least some tidbit from this elite corps of earnings estimators. But ours is an acquired taste. And its acquisition is still closely held, or so we’ve gathered from a reading of comments solicited from the public by the Securities and Exchange Commission under the rubric of “Selective Disclosure and Insider Trading.” Consider this modest sampling, from which, for the sake of family readership, we’ve pared what the most expressive of day traders think: “Maintaining the cloak of secrecy surrounding the communications between analyst and company executives smacks of elitist disdain for the intelligence of the independent investor.” “Open up and let the ‘little guy’ have the same information that the ‘big boys’ use to help wipe out what the ‘little guys’ invest in order to get ahead.” “The analysts are, of course, against this regulation. However, that pretty much proves to me that it is a good one.” SEC Chairman Arthur Levitt has added to the perception of analysts as little more than baton twirlers in the Fortune 500 earnings march. “As Wall Street analysts play an increasingly visible role in recommending stocks,” he said by way of introducing Regulation FD August 10, “some in corporate management treat material information as a commodity – a way to gain and maintain favor with particular analysts. “What’s more, as analysts become more and more dependent on the ‘inside word,’ the pressure to report favorably on a company has grown even greater, as analysts seek to protect and guarantee future access to selectively disclosed information.” There’s much to rejoice, certainly, in the passage of Regulation FD. But while many are hailing it as a victory for the “little guy,” we believe it’s the analysts themselves who’ll benefit most. For starters, they’re being freed from their “reporting” detail, which in context means being sufficiently attuned to the top management of the companies they cover to warrant the same “heads up” as a competitor down the Street. The removal of such hand-holding responsibilities should, in turn, allow analysts to do what they do best. And that, presumably, is to analyze. As former media analyst Alan Gottesman, who currently runs West End Consulting, prophesied: “Only the shallower competition will be stopped by this measure.” As for the burden of reporting, Regulation FD seems to consign, if not actually return, it to the business press. This, for reasons of recent history, is a mixed blessing. There was a time when corporate titans played to reporters as much as they did to analysts. Masters of this game – Coca-Cola Co.’s Roberto C. Goizueta comes to mind – would write to both not only to keep them in line but also to praise stories and commentaries they considered sublime. (Goizueta’s doings also commanded attention for the simple reason that the Coke chief’s public addresses invariably – and purposely, we’ve been told – included at least one newsworthy utterance.) Somewhere along the way – and speaking for ourselves, if no one else – analysts got busy and reporters got lazy. More than a few of us stopped making two calls when, for most developments deemed newsworthy, a single call to the right analyst could deliver both the situation and its interpretation. Why burden ourselves with real reporting or thinking? The Internet greatly changed this unhealthy dynamic by playing to America’s galloping interest in the bull market that coincided so remarkably with the Web’s development. There now seem to be as many sites devoted to business and investments as there are to pornography. The population of financially oriented reporters has been inflated in the process, setting up a situation akin to too many dollars chasing too few goods. But analysts are being chased by so many reporters that any fraternity between them is frayed by media relentlessness. An analyst we’ve known for decades recently revealed he no longer immediately crunches the numbers on major developments at the companies he covers. Why? “Because I’m so inundated with calls from you guys,” he said, “I’d rather just say ‘I haven’t sorted it out yet’ than spend all my time on the telephone.” Not every media outlet has been affected equally, but there’s no denying that access to analysts has been as critical an issue to financial journalists as access to management is to Wall Street analysts. On whom, otherwise, are we to hang our own feeble judgments? It is here that Regulation FD could have its most sweeping effect. “The regulation will not apply to issuer communications with the press …” the SEC said in defining its so-called “narrowed scope.” And we take this to mean that, if we do our job right, analysts won’t just be returning our calls but, rather, calling us instead. FOR TEEN-AGERS, THAT’LL BE 32/7 Media merchant bank Veronis Suhler has just disseminated its 14th annual “Communications Industry Forecast,” wherein we learn how consumed by the stuff we are and will continue to be: “American consumers, who spent an average of 9.3 hours per day using media in 1999, will fuel media spending growth by adding more than an hour to their average daily consumption totals by 2004, when the average is expected to reach 10.4 daily hours.” Unreal you say? Not with multitasking such a present and continuing force. Or, as Veronis explains parenthetically, “When two forms of media are used simultaneously, both are counted.” Copyright �2000 TDD, LLC. All rights reserved.

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