5 Terms That Can Tell You a Lot about Wall Street’s Earnings

Sugarcoating business conditions is a thing that investors have to watch out for, thanks to this habit of word play by CEOs and CFOs. An example of this was the events that led to Research in Motion’s downfall and where words like ‘challenging start’ and ‘market challenges’ that disguised its depleting financial state.

So, keeping this is mind, let’s look at 5 terms that might not necessarily reflect the true situation (in words that is) that the company finds itself in:

#1: Conditions were challenging

According to money-managers who have spent years in the business, this phrase simply means that the company has been taken apart by the competition.

#2: Weather affected sales

This statement means that the company is making a product or offering a service that is not wanted by anyone at all or it could also indicate that they are losing market share.

#3: Right-sizing inventory

This statement, simply put, means that the company’s sales are dropping slowly or sharply. Almost everyone who might not have understood what that meant, at first glance, gets the meaning that is lost in financial jargon.

#4: Macro-environment was weak

This phrase is used when a company’s profits are less than internal projects. The economy is blamed here so that people are diverted from the fact of the loss registered for the quarter.

#5: We face uncertainty

This phrase actually means that the company is certain that business is slowing down, and which if you look closer is because they’ve lost sales in the previous quarter.