Earnings calls represent an important advertising opportunity for Sell-Side Analysts. Ask a question and wait for the Buy-Side calls to roll in over time. Many analysts are frustrated either by not being allowed to ask a question or not getting the first question on the call.
The frustration is prevalent.
Give me an Investor Relations Officer and I guarantee that he or she has more than one analyst the company does not want asking questions on the earnings call.
The Sell-Side needs to remember extensive preparation and thought goes into building the earnings call and earnings materials. Several weeks of prep and review go into developing the call script, earnings release, Q&A session, and investor deck.
Ultimately, the earnings call represents management’s opportunity to convince the Street that they are the right people to run the business on a day-to-day basis. If your actions do not support this end, then you are likely going to be unhappy with your earnings call participation.
A few things to consider:
The First Question: often selected and prepared in advance. If a difficult question needs to be asked, then management would prefer it be done in an articulate and respectful manner. Good Investor Relations will often select and reach out to an analyst about the first question in advance of the call.
Negativity: If you are an overly negative analyst or sell-rated on the company you will not get a question. Resist the temptation to hit star-1 on your touchtone key pad. The earnings call is not the proper forum to air grievances or debates about your research.
Not in the Queue or Last in the Queue: If you do not like your earnings call real estate, then I ask you one question, “Are you the analyst that asks what is your tax rate?” Analysts asking esoteric or gotcha questions are not going to get air time on the call. To improve, consider preparing articulate questions in advance. Consider sharing them with IR, as this allows them to prep actual answers to your question.
As an analyst, if your participation on and off the call helps management convince investor that they are the right people to run the business on a day-to-day basis, you will enjoy repeat Q&A participation.
