As the old rule goes, "underpromise, overdeliver." You always want to make conservative predictions about the uncertain future, but if you can thrill the market with a surprise gift of better-than-expected earnings from time to time, then bully for you. It's the investor relations equivalent of Berkshire Hathaway
Yesterday, Finnish telecom Nokia
Analysts also predicted that Nokia would earn just 0.13 euro for the quarter. Again, the company beat expectations by earning 0.14 euro. The fact that this was down from its year-ago performance was given short shrift, as that assumption had already been priced into the company's shares.
Now comes the fun part. Nokia's shares got a considerable (1.7%) boost on a very gloomy day for the market at large. A lot of that can be chalked up to the company's admirable financial performance this quarter. But even more important to Wall Street's vote of confidence, I suspect, was Nokia's raising its promise of revenue gains for Q4. Whereas analysts were expecting Nokia to sell no more than 8.2 billion euro in goods and services next quarter, Nokia is promising about 8.5 billion euro.
So is Nokia now foolishly (small "f") jumping off the underpromise bandwagon? Speaking as a Nokia shareholder, while I admire the long-term focus taken by companies such as Coca-Cola
Can't get enough of Nokia news? Read the saga of its courtship of Symbian. It's long enough to tide you over till the next earnings report comes out:
- Nokia Settles Symbian Saga
- Ericsson Calls Nokia's Bluff
- Nokia's Drama Queen
- Nokia's Foiled Power Play?
- Nokia's Symbian Gambit
Fool contributor Rich Smith owns shares of Nokia, but of no other company mentioned in this article.