The joys of earnings season

Ah, earnings season. Thereâ€s nothing like it.

Earnings season is the two-week period when, one after another, all the companies youâ€ve been assigned to cover announce their quarterly results, slamming you with extra work and causing no end of trouble with the summary sheets. Itâ€s a delightful experience, let me tell you.

This time, thereâ€s a new associate in the office... and heâ€s been assigned to scrub half my comps. Now, comps are a fairly ad hoc business in this group – theyâ€re frequently not scrubbed, not correct, or just not updated at all. (Of course, weâ€re shining bastions of accuracy compared to the groupâ€s London analysts. A few months ago, when I requested four of the comps theyâ€re supposed to cover, the comps they sent ranged from eleven months old to three years old.)

Well, Iâ€ve rarely been asked by a scrubber to actually turn in comps and backup, and even when I do, no one has actually ever scrubbed a comp of mine in the normal course of business. (I am not kidding.) Unfortunately, the new associate now has to prove himself, and that means lots of extra work for both of us. Expecting the comps to be gone over with a fine-toothed comb, I took extra care to make everything flawless, fill out all the extraneous data (beta, dividend yield, the full range of options, and so forth), and highlight/sticky flag the hard copy backup. I did the whole nine yards. I penciled in notes to show which charges I put in the “unusual” line. I labeled everything neatly, stapled and stacked them, and saved everything in two separate locations.

Letâ€s be honest, folks – comps are not exactly rocket science. You can only do them so well… and thatâ€s how well I did them. So when I dropped by his desk today to see how he was getting along, I was shocked to see him staring at my comps and making a long list of notes.

“Where did you get the template for this one,” he asked.

Huh? What has that got to do with anything? “I didnâ€t build the comps from scratch; I updated the ones that were already in use.”

“Hmm. Well, itâ€s completely different. Look at it.”

I looked. I saw nothing unusual. “Whatâ€s wrong?”

“Whatâ€s wrong is that all the fonts are different – the formatting is completely different.”

Little pause here while I try to figure out whatâ€s going on. Fonts are meaningless in a comp because only the data gets pulled. What the hell? “Okay,” I say. “No problem. Would you like me to change the fonts and formatting to match all the other comps?”

“Itâ€s not just that. See, this tab is named something different.”

“Yes, I see. Okay.”

“So if someone has a model pulling from this comp and the tab is named something different then it wonâ€t pull.”

“… Right. Well, Iâ€ve never seen anyone use something other than the individual cell names when it comes to comps. But itâ€s no big deal; would you like me to change the name of the tab?”

“I would prefer if you just went back and used the standard format.” Heâ€s getting testy now.

Longer pause here. “Okay, no problem. Just give me an example of the format you want to use and Iâ€ll go cell-by-cell to make sure I make all the changes.”

He leans forward and slows down his speech. “I want you to use the firm standard format. The one that all the other comps use.”

All the other comps? Jesus… what fantasy land is this guy living in? “Um, there are a lot of different formats. If youâ€ll look in the folder youâ€ll see all sorts of weird stuff – comps that pull from ticker sheets, comps that pull from industry summary sheets, comps that source data from FactSet, comps that pull from IDD, which we donâ€t have access to any longer, manual comps, comps with different firm names on them. The firm standard comp template that you can download is a year and a half old and it doesnâ€t work with any of the summary sheets or models that we use these days. So Iâ€ll be happy to reformat this comp in any way you want. Just let me know.”

He shakes his head angrily. Then he pulls up some other comps and checks them out. Then he scowls even more angrily. He doesn't like what he sees. “Iâ€ll have to get back to you on this.”

Hah. “Sure, no problem. Just let me know if you have any more—“

“In the meantime, I want you to go back and pull all the currency conversion data yourself.”

“… Sure, no problem. But the currency data on our standard comp pulls automatically – the numbers are very trustworthy – and if I hard-code that cell, then people who are using it wonâ€t know to update the conversion rates when they—“

“Then add a note to the individual cells.”

Of course, nobody checks the notes in the cells before using a comp, so these comps are going to be working off old conversion rates. But you know, Iâ€ve learned that this kind of talk is rarely welcome with associates. The guy was slightly wrong about something in front of me, he feels bad because of it, and he's got to deliver a little poke to restore the natural order of things -- to assert that he's there to guide me and fix my mistakes. Thereâ€s nothing left to say. “Sure," I say. "No problem. Iâ€ll take care of that now.”

Now, that brings me to the first four phrases an analyst should learn:

Got a minute? (Never just walk into someoneâ€s cube and start talking. You gotta be big before you can get away with that. “Got a minute?” gives them an out; it means they can say no. And frequently they will.)

Sure, no problem. (Even if youâ€re about to say something that means “Thatâ€s not a good idea,” or “I canâ€t do that until tomorrow.” Rule 1 of salesmanship and analysthood: always say yes before you say anything that sounds even vaguely like no.)

Iâ€ll take care of that right now. (In other words: I acknowledge the importance of both you and your project. This is especially nice for associates to hear, because it means that at least SOMEone is listening and responding.)

Would you like me to…. (Print and bind you a special color copy just for proofing? Use color-coded highlighters and sticky flags? Hand-carry it to your summer home in Bridgehampton at 10 PM on a Saturday night? Gift-wrap it with handmade washi paper and a dupioni silk bow? Whatever it is, no matter how off the wall the service you are offering, they WOULD like you to do it, of course. All you can do is hope they remember that extra effort at bonus time.)