The Earning Calls Tip

Warren Buffet abides by the rule that the management of the companies he invests in should be “able and honest.” That’s good advice. And it could be applied to choosing companies to act as service providers too. One tool for learning whether management is able and honest (aside from monitoring their scoring practices during a game of golf, which is probably an option for Warren, but maybe not for the rest of us) is to study them as they present during earnings calls.

I sit through a lot of earnings calls. This typically involves nothing more than a quick registration then tuning in by phone and Web site at the appropriate time. If you miss it live, many companies make them available for a certain period afterwards through their Web sites. After short presentations, typically, press and analysts get a chance to ask questions and you get to hear the CEO, the CFO and other executives on the hot seat, though it’s rarely exciting. Nobody yells or pounds the desk, from what I can hear.

However, you get a chance to learn about some of the company’s successes and failures from the past quarter — and to glean hints about projects it’s undertaking in coming months, as well as new acquisitions it’s finalizing, how it views its positioning against competitors, company history, and other details that give you a bigger picture of your potential partner.

That’s one trick for evaluating possible vendors that you’re considering — at least the ones that are publicly traded.

Below I supply some links to the investor areas of three major service providers’ Web sites, so you can check out what I mean. In future bloggings, I’ll share the details from earnings calls that I tune into. It isn’t limited to these three, by any means. It’s just that these happen to include current links to Webcasts so you can check out what I’m talking about.