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Earnings Seasons, Preannouncements and the Elusive Green Shoe Company

Also, perspectives on the secular world.

First up is John Larcheveque, who writes: "Many


articles knowingly allude to the 'earnings season,' often referring to it as a period of anguish and turmoil. But when does it come round exactly? Are there calendar landmarks the would-be trader should be aware of regarding earnings reports?"

Financial reporters dread earnings periods for the same reason waiters hate the coupon-riddled early dining hour. A lot of extra work for no extra pay.

Earnings seasons, like the meteorological sort, never come "exactly." They ebb and flow along with the fiscal calendar, which varies from company to company. The U.S. government's fiscal year ends September 30. But in the private sector, companies determine their own calendars, with many seasonal businesses staggering them to match their business cycles. If you want to find the fiscal calendar of a given company, just go to

EDGAR Online or the

Securities Exchange Commission's

Web site and look at its filings.

That said, fiscal calendars aren't completely patternless; if they were, it'd be impossible to refer to anything like earnings seasons in the first place. You'll find that the most common fiscal year is one that matches the normal calendar, with quarters ending March 31, June 30, September 30 and December 31. News wire services start calling companies during the last week of their quarters to see when they're planning to report. And though companies have up to 45 days to report quarterly earnings, and up to 90 days after the fourth quarter, most reports cluster about 15 days after the end of the quarter.

Those with less macrocosmic concerns can just check out


earnings calender.

Along those same lines, David Peterson writes: "What's the deal with preannouncements? They just hit me from nowhere. Is there any way to gauge when a company is most likely to preannounce? I thought quiet season and preannouncement were at the same time, about a month before earnings. I usually hold positions about two days and avoid earnings and news at all costs, pure technical."

With financial media proliferating to the point of ubiquity, it's getting harder and harder to avoid news in general. But if you're trying to avoid earnings news specifically, you may just have to stay away from stocks in volatile, growth-oriented industries whenever companies' near the end of their quarters. Or just switch to strict day trading.

Anticipating preannouncements is tough. Companies sometimes follow patterns in their preannouncements, tending to reliably time them a certain number of weeks before they report. You can rely on rumors, too. Of course, none of this is very scientific. And while traders often refer to the couple of weeks before the end of the quarter as "preannouncement season," there's no law that says a company can't preannounce after the quarter is over, too. Strictly speaking, preannouncement season lasts until the moment a company has reported its earnings. You can call the subsequent period postannouncement season.

You should know that preannouncements do not violate any sort of regulatory quiet period. The quiet periods company spokespersons invoke when refusing to answer questions during earnings season are very different from the quiet periods enforced by the

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Securities Exchange Commission

during the IPO process. Earnings season quiet periods are self imposed and vary by company, more "a matter of practice than of regulation," according to SEC spokesman

John Heine

. Companies can preannounce with impunity if there's a considerable discrepancy between forecasts and their actual earnings. With regulatory impunity, that is.

Message Center

Memo to Steve Pattrick, who wonders where the term "green shoe" originated: For those who don't know, the "green shoe" refers to the additional stock that underwriters can distribute if an IPO or secondary offering meets with greater-than-expected demand. Unfortunately, its etymology is unclear. One vague and useless version has the term combining the good luck mantra of the craps table ("baby needs a new pair of shoes") with the undisputed color of lucre, green. A more compelling story traces the term to a London company called, of all things,

The Green Shoe Company

, which supposedly was the first firm to use the option in an underwriting. But verifying that story is a little tough, since the only Green Shoe company I've been able to track down is an unlikely startup software firm called

Green Shoe, Inc.

, which was profiled last year in the

Washington Business Journal, and which may or may not still be operating. Sorry.

Memo to David Morgenstern, who asks the abstruse question of what the heck a secular trend is, as opposed to a religious trend: Great question, David. Depending on your perspective, the economic meaning of secularity is either very different from or very similar to its more familiar sense of "worldliness." In business-speak, secular trends are long-term trends, rather than seasonal or cyclical shifts -- which makes perfect sense, since the term derives from the Latin


, meaning "of an age." But while a generation is a pretty long time for economists, any Jesuit will tell you that it's pretty short-term and cyclical in the whole scheme of things.

Memo: Have a dumb question relating to finance? Great. Have a problem with something I've written? Let me know at, and I'll do my best to answer every Saturday. Include your full name, and please, no questions seeking personal financial advice or regarding personal brokerage disputes. And this reminder: Because of the volume of mail, personal replies can't be guaranteed.