What is an earnings conference call?

By Investopedia Staff AAA
A:

The earnings conference call is a way for companies to relay information to all interested parties, including institutional and individual investors, as well as buy- and sell-side analysts. Conference calls allow companies to highlight successes during prosperous times and calm fears during adverse ones. The most popular time for companies to conduct these calls is immediately following the release of financial results, typically at the end of each quarter; these are known as quarterly earnings-results conference calls.

Traditionally, conference calls that follow the release of earnings news have a facilitator, or a person who essentially acts as the conference call master of ceremonies and introduces the various participants. The call usually starts off with the vice-president of investor relations outlining the conduct of the call and acknowledging that the call will probably contain plenty of "future-looking statements", or predictions about the future of the business (which is always uncertain). By acknowledging future-looking statements, the company reminds investors not to assume that everything discussed in the call will happen for certain.

Conference call participants usually include the chairman, CEO, CFO and, depending on the company and the events under discussion, various other executives. These individuals provide an overview of all the major issues that affected the company's performance during the last quarter. Discussions usually also focus on what can be expected from the company in the upcoming quarters.

A conference call generally ends with a question and answer period, when analysts and investors can ask informed questions regarding the company.

Real-time Internet broadcasting has opened up conference calls to the average investor, allowing him or her to participate in or simply listen to the calls. You can usually find them in the investor relations section of companies' websites, among other places. Conference calls are a great way for investors to stay in touch with their current or prospective companies; a lot of valuable information is often divulged during these calls.

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