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According to Dunnan^[1], a whisper number is an unofficial estimate of the earnings per share that "bounces around Wall Street trading desks, on specific websites and in online chat rooms". Unlike a formal analysis by a financial analyst, it is a forecast, made by traders and investors, of a company's earnings based upon their own informal opinions.

According to Dunnan, investors tend to rely upon whisper numbers when the estimates provided by financial analysts are seen to be too conservative. Barron's^[2] references sites that gather whisper numbers including EarningsWhispers.com and Dunnan advises caution in dealing with such sites; a thorough check of how they gather their data, because some sites tally the opinions of individual investors rather than of professional traders; and not basing one's investments solely upon whisper numbers, especially if one is investing for the long-term rather than day trading

Gimein^[3] describes the data from such whisper number web sites as "both surprisingly useful and troublingly mysterious". He cites "a paper published by three business professors in the Journal of Accounting and Economics that surveyed whisper numbers posted on Internet discussion boards between January, 1995 and May, 1997" reporting their findings as being that "the Net rumors were actually more effective at predicting company earnings than analyst forecasts". He describes whisper numbers as information that is "bubbling up from a mysterious well, a collection of Internet sources impossible to trace", a thought that "leaves nobody feeling fully comfortable". Gimein also describes the possibility for whisper numbers to be manipulated. He ameliorates that by stating that there is "more hard evidence for their usefulness than for that of a great deal of hocus-pocus stock analysis". EarningsWhispers.com gets its whispered expectations from analysts^[4] following the company; therefore, EarningsWhispers.com's numbers are not susceptible to manipulation and are more likely to get the true expectations of institutional traders and that are spread among trading desks.

EarningsWhispers' whisper numbers have also shown to be more accurate than consensus estimates. A Bloomberg News study ^[5] found that EarningsWhispers.com's estimates missed actual results by 21% while the consensus estimates were off by an average of 44%.

EarningsWhispers is reliable since Quantcast.com's data shows that 79% of the visitors to EarningsWhispers.com earn more than $60,000 per year.

According to Investopedia.com^[6] a whisper number is a company's forecasted future earnings or revenues according to the collective expectations of individual investors. In this sense, a whisper number would be compiled by a website polling its visitors. Individuals come up with a whisper number using their own analysis of company financials, market trends, gut feel, etc.

Whisper numbers are especially useful when they differ from the consensus forecast. They can be used as a tool to help spot (or avoid) an earnings surprise (or disappointment). Of course, this is only relevant if they are more accurate than the consensus estimate, and this depends on your source.

With increased regulatory scrutiny placed on the brokerage industry in the start of the century, it's much more difficult (if not impossible) to get a whisper number in the traditional sense. For example, regulations such as Sarbanes-Oxley provide for stricter rules in how companies disclose financial data. Employees, financial professionals and brokerages face significant penalties if they provide insider earnings data to a select group of people. While it's impossible to know the extent that whisper numbers still circulate among the wealthy, it's highly unlikely to be able to get this data as a small investor. For these reasons, the newer definition (expectations of individuals) is of more relevance to regular individual investors. (Source: Investopedia.com, 2005)

New York Times: The author of "Trading Secrets: Seduction and Scandal at the Wall Street Journal" mentions the rise of whisper numbers to counter the misled 'little guy' investor.^{[citation needed]}

References

^ Nancy Dunnan. "Whisper numbers". BUYandHOLD. Freedom Investments. Retrieved 2005-12-13.
^ "Websites That Earn Their Keep". Barron's. Dow Jones. 2007-1-22. {{cite web}}: Check date values in: |date= (help)
^ Gimein, Mark (1999-10-26). "Whispernumber.com is beating the best minds of Wall Street — but nobody really knows how". Information Laundromat. {{cite news}}: Check date values in: |date= (help)
^ "Consider the Source When Evaluating 'Whisper Estimates' on the Internet". Wall Street Journal. Dow Jones. 2000-7-23. {{cite web}}: Check date values in: |date= (help)
^ "Whispers That Roar". Bloomberg Magazine. August 1999. {{cite news}}: |first= missing |last= (help); Check date values in: |date= (help); Text "Leefeldt" ignored (help)
^ Eccles, Robert (2001-3-15). The ValueReporting Revolution: Moving Beyond the Earnings Game. Wiley. {{cite book}}: Check date values in: |date= (help)
^ Invesopedia. "Whisper Number". Investopedia. Retrieved 2006-4-28. {{cite web}}: Check date values in: |accessdate= (help)

External links

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 According to Dunnan{{ref|Dunnan}}, a '''whisper number''' is an unofficial estimate of the [[earnings per share]] that "bounces around [[Wall Street]] trading desks, on specific websites and in online chat rooms".  Unlike a formal analysis by a [[financial analyst]], it is a forecast, made by traders and investors, of a company's earnings based upon their own informal opinions.
-According to Dunnan, investors tend to rely upon whisper numbers when the estimates provided by financial analysts are seen to be too conservative.  Barron's{{ref|Barrons}} references two sites that gather whisper numbers using different methods:  [http://www.earningswhispers.com EarningsWhispers.com] and [http://www.whispernumber.com WhisperNumber.com]; and Dunnan advises caution in dealing with such sites; a thorough check of how they gather their data, because some sites tally the opinions of individual investors rather than of professional traders; and not basing one's investments solely upon whisper numbers, especially if one is investing for the long-term rather than [[day trading]]
+According to Dunnan, investors tend to rely upon whisper numbers when the estimates provided by financial analysts are seen to be too conservative.  Barron's{{ref|Barrons}} references sites that gather whisper numbers including [http://www.earningswhispers.com EarningsWhispers.com] and Dunnan advises caution in dealing with such sites; a thorough check of how they gather their data, because some sites tally the opinions of individual investors rather than of professional traders; and not basing one's investments solely upon whisper numbers, especially if one is investing for the long-term rather than [[day trading]]
-Gimein{{ref|Gimein}} describes the data from such whisper number web sites as "both surprisingly useful and troublingly mysterious".  He cites "a paper published by three business professors in the [[Journal of Accounting and Economics]] that surveyed whisper numbers posted on Internet discussion boards between January, 1995 and May, 1997" reporting their findings as being that "the Net rumors were actually more effective at predicting company earnings than analyst forecasts".  He describes whisper numbers as information that is "bubbling up from a mysterious well, a collection of Internet sources impossible to trace", a thought that "leaves nobody feeling fully comfortable". Gimein also describes the possibility for whisper numbers to be manipulated, pointing to the fact that [[WhisperNumber.com]]'s figure for the [[Ford Motor Company]] (at the time of writing) was "compiled from just five whispers" and that therefore "[j]ust a handful of people can change the projections for a multi-billion dollar corporation". He ameliorates that by stating that there is "more hard evidence for their usefulness than for that of a great deal of hocus-pocus stock analysis".  On the other hand, [http://www.earningswhispers.com EarningsWhispers.com] gets its whispered expectations from analysts{{ref|WSJ}} following the company; therefore, [http://www.earningswhispers.com EarningsWhispers.com]'s numbers are not susceptible to manipulation and are more likely to get the true expectations of institutional traders and that are spread among trading desks.
+Gimein{{ref|Gimein}} describes the data from such whisper number web sites as "both surprisingly useful and troublingly mysterious".  He cites "a paper published by three business professors in the [[Journal of Accounting and Economics]] that surveyed whisper numbers posted on Internet discussion boards between January, 1995 and May, 1997" reporting their findings as being that "the Net rumors were actually more effective at predicting company earnings than analyst forecasts".  He describes whisper numbers as information that is "bubbling up from a mysterious well, a collection of Internet sources impossible to trace", a thought that "leaves nobody feeling fully comfortable". Gimein also describes the possibility for whisper numbers to be manipulated. He ameliorates that by stating that there is "more hard evidence for their usefulness than for that of a great deal of hocus-pocus stock analysis".  [http://www.earningswhispers.com EarningsWhispers.com] gets its whispered expectations from analysts{{ref|WSJ}} following the company; therefore, [http://www.earningswhispers.com EarningsWhispers.com]'s numbers are not susceptible to manipulation and are more likely to get the true expectations of institutional traders and that are spread among trading desks.
-EarningsWhispers' whisper numbers have also shown to be more accurate than consensus estimates.  A Bloomberg News study {{ref|Bloomberg}} found that EarningsWhispers.com's estimates missed actual results by 21% while the consensus estimates were off by an average of 44%.  But that does not mean all whisper sites can be trusted.  The book ''The ValueReporting Revolution: Moving Beyond the Earnings Game'' {{ref|Eccles}} by Robert G. Eccles points out that:
+EarningsWhispers' whisper numbers have also shown to be more accurate than consensus estimates.  A Bloomberg News study {{ref|Bloomberg}} found that EarningsWhispers.com's estimates missed actual results by 21% while the consensus estimates were off by an average of 44%.
-:"an article called 'Psst, Want to Manipulate a Whisper Number?' by Jack Reerink recounts several examples of how some investigative journalists from Reuters, tipped off by a suspicious individual investor, experimented with manipulating the whisper numbers on WhisperNumber.com's website.  In one instance, they succeeded in upping [a whisper number] for a small high-tech company from a loss of 8 cents per share to break even for the quarter.  They did it by simply inserting their own estimates into the website, which is how data are collected to produce the whisper estimate, and they did it in less than two minutes."
+EarningsWhispers is reliable since Quantcast.com's data shows that 79% of the visitors to EarningsWhispers.com earn more than $60,000 per year.
-Furthermore, a subsequent follow up study by Bloomberg News found that WhisperNumber.com's estimates were not as accurate as the consensus estimates.
-This 'statement of potential manipulation' has since been refuted many times over{{Fact|date=February 2007}} based on actual accuracy and results.  According to a Reuters News article: 'Yahoo! reported a net profit of 8 cents per share, meeting analysts' consensus forecast but falling short of the whisper number. Subscribers to the Web site WhisperNumber.com had pegged Yahoo!'s earnings per share at 10 cents, hiking their forecast from 9 cents just five days ago.'{{Fact|date=February 2007}}  Barron's Magazine stated{{Fact|date=February 2007}} 'since WhisperNumber.com lets you actually check out its track record, we recommend you pay it a visit and look around on a free trial -- and compare it to how the professional analysts are doing.”'  And from the book ''The Influentials'' written by Ed Keller & Jon Berry{{Fact|date=February 2007}}:
-:"WhisperNumber.com is a beehive of Influential activity. A study by Roper (now called NOP World Research) shows that 50% of 800 surveyed WhisperNumber.com members are Influentials. WhisperNumber.com's users were particularly likely to have performed Influential activities related to getting their opinions out into public. For example, they were seven times more likely than the public as a whole to have written an article for publication in the past year. They were six times more likely than the public as a whole to have given a speech. These findings seem to be consistent with a group of investors who believe enough in getting out their opinions on the stock market that they flock to a Web site that serves that purpose. There's a message for all businesses in WhisperNumber.com's story. Succeeding with Influentials begins with information. A salient, meaningful piece of information is at the very least a conversation starter. It can also - if it's an important piece of information, like the consensus estimate of a company's quarterly earnings from unbiased investors - make the difference in a decision that is critical to Influentials, such as achieving financial independence, which is the leading financial goal of Influentials."
-Quantcast.com's demographic data confirms that about half of WhisperNumber.com's users are influential, showing that 46% of their visitors earn more than $60,000 per year.  Still, if the amount of influence the audience has is a measure of the trust and accuracy, then EarningsWhispers is the more reliable since Quantcast.com's data shows that 79% of the visitors to EarningsWhispers.com earn more than $60,000 per year.  (Data for both sites are as of November 2007)
 According to Investopedia.com{{ref|Investopedia}} a whisper number is a company's forecasted future earnings or revenues according to the collective expectations of individual investors. In this sense, a whisper number would be compiled by a website polling its visitors. Individuals come up with a whisper number using their own analysis of company financials, market trends, gut feel, etc.
 Whisper numbers are especially useful when they differ from the consensus forecast. They can be used as a tool to help spot (or avoid) an earnings surprise (or disappointment). Of course, this is only relevant if they are more accurate than the consensus estimate, and this depends on your source.
-CFO Magazine: ‘The Whisper Game’
-“Individual investors have been getting into the game with earnings estimates posted on the Internet that are now being aggregated by Web sites, such as WhisperNumber.com. Although this companion set of predictions is typically more optimistic than the analyst consensus published by First Call, IBES International Inc., and Zacks Investment Research, it is often more accurate and can serve as a reasonable predictor of stock movement.”{{Fact|date=February 2007}}
 With increased regulatory scrutiny placed on the brokerage industry in the start of the century, it's much more difficult (if not impossible) to get a whisper number in the traditional sense. For example, regulations such as Sarbanes-Oxley provide for stricter rules in how companies disclose financial data. Employees, financial professionals and brokerages face significant penalties if they provide insider earnings data to a select group of people. While it's impossible to know the extent that whisper numbers still circulate among the wealthy, it's highly unlikely to be able to get this data as a small investor. For these reasons, the newer definition (expectations of individuals) is of more relevance to regular individual investors. (Source: Investopedia.com, 2005)

Revision as of 04:04, 25 January 2008

References

Further reading

External links