Dig for Treasure
Earnings season is over. Executives have given their all-important "guidance" about upcoming quarters and the outlook. So now what should an enterprising investor do? Watch those regulatory filings.
Its time for 10-Qs and 10-Ks, also known as quarterly filings and annual reports. These often long-winded reports have to be filed with the Securities and Exchange Commission following a companys earnings release.
These filings are going to pick up over the next few weeks, and you should be watching. Given that companies arent going to leak details about upcoming quarters because of Regulation Fair Disclosure, the filings are becoming increasingly important. Amazon.com, Yahoo! and a host of heavy hitters should be filing reports shortly. Akamai Technologies and Apple Computer filed their quarterly reports last week.
Finding these reports is relatively simple. Go to www.freeedgar.com, www.sec.gov and www.edgar-online.com, which is a pay service. Make it a routine to check in on the companies in your portfolio. Below are a few items worth noting from Apples 10-Q. These highlights are standard across most filings.
The figures: The company releases its earnings and gives details on its conference call, but the filings hold more detail than youll ever need. According to its regulatory filings, Apple nearly halved its finished goods inventory to $16 million as of Dec. 30, from $30 million on Sept. 30.
Investments: Every company carries holdings of privately held and public securities. These investments are also cashed in to smooth out earnings. In Apples filings, the company said it sold 1 million shares of Akamai for a gain of $39 million. However, the value of Apples Akamai holdings fell dramatically. As of Sept. 30, Apples 4.1 million stake was $216 million. Even adding back Apples gains from the sale of Akamai shares, the investments value was more than halved in three months.
Executive perks: Apple took a charge of $90 million so it could buy Chief Executive Steve Jobs an airplane.
Discussion: The company gives an outlook for the next quarter and future results. it also hints about what could derail future results. In Apples case, there wasnt any new information. The company expects sales to decline year over year, but it said it will be profitable during the next three quarters.