Disclosure Advisory Board Responds to Chamber of Commerce Recommendations on Earnings Guidance

    Board raises concern about elimination of quarterly guidance and focus on
    annual EPS range

    NEW YORK, March 21 /CNW/ -- PR Newswire's Disclosure Advisory Board, a
15-person council of leaders in the corporate, regulatory, investor, reporting
and academic communities, expressed concern that recommendations about
earnings guidance by the U.S. Chamber of Commerce are too narrowly focused.
    (Photo:  http://www.newscom.com/cgi-bin/prnh/20070321/NYW025
    Logo:   http://www.newscom.com/cgi-bin/prnh/20000306/PRNLOGO )
    In its report entitled, "Commission on the Regulation of U.S. Capital
Markets in the 21st Century - Report and Recommendations," the U.S. Chamber of
Commerce calls for eliminating quarterly guidance and relying upon an annual
range of projected EPS as the primary means for forecasting performance. The
Disclosure Advisory Board believes that these recommendations could stifle
transparency, if implemented as a one-size-fits all approach.
    While sharing the Chamber's concern about "short-termism" and the false
precision of single-point earnings estimates, the Board recommends a more
nuanced approach.  In the Board's view, companies should consider guidance
relating to key qualitative and quantitative company and industry performance
measures, with time horizons tailored to their own circumstances and business
strategy.  An exclusive focus on annual EPS guidance -- even expressed as a
range -- would neglect both the market importance of short-term investors and
short- and long-term objectives and risks that affect bottom-line results. The
Chamber's report acknowledges the growing interest among companies in
providing long-term perspectives on business fundamentals.  The Board endorses
this holistic approach as the proper focus of guidance, but not to the
exclusion of potentially significant short-term performance perspectives.
    Mark Hynes, managing director of Global Investor Relations Services for
PR Newswire and a member of the Disclosure Advisory Board, responded, "We at
the Disclosure Advisory Board welcome the U.S. Chamber of Commerce into the
debate on guidance, but we believe that its recommendation that 'all public
companies should seriously consider the permanent elimination of quarterly
guidance on earnings per share,' goes well beyond what is necessary.  By
contrast, the proposal that companies should move to 'annual guidance with a
range of EPS numbers' does not go far enough.
    "As the Disclosure Advisory Board highlighted in its white paper,
'Guiding Investors & Analysts: How Much Information is Enough?' there are
common circumstances in which companies should use short-term guidance.  For
instance, the thirty-five percent of listed companies on the NYSE and NASDAQ
that have no analyst coverage are good candidates for using quarterly guidance
to meet investor needs.
    "On the other hand, the Board takes a much wider view of the need for
longer term guidance.  Painting a picture through reviews of long-term
strategies and goals, industry metrics and trends, acquisitions and
innovations provides the tools for investors and analysts to better assess a
company.  Simply relying on annual EPS as a mark of performance is too narrow.
The Board sharply delineates between mere revenue and EPS forecasts and
meaningful guidance about business drivers.
    "It is also important that the issue of earnings guidance not be viewed
in isolation.  There is a growing body of surveys and research demonstrating
that short-term earnings guidance can lead to management behavior that focuses
on meeting short-term earnings goals at the expense of longer-term focus on
R&D and other value enhancing goals."
    To learn more about the Disclosure Advisory Board and request a copy of
the complete white paper, please visit
http://disclosureadvisoryboard.mediaroom.com/.  To read Mark Hynes' blog, go
to http://transparencymatters.blogspot.com/.

    About the Disclosure Advisory Board
    The Disclosure Advisory Board was brought together by PR Newswire in June
2006 to assess and comment upon the state of corporate disclosure and
transparency. Comprised of 15 individuals with a combined 450 years of
regulatory and compliance experience, the aim of the Board is to debate
current disclosure and governance issues, and based on the discussions,
propose "best practices" for improved financial and corporate reporting. The
Disclosure Advisory Board believes that communication -- disclosure and
transparency -- lies at the heart of winning back public consent.
    Members of the panel are: John Bierbusse, corporate director and retired
equity research analyst at A G Edwards; Janet L. Fisher, partner, Cleary
Gottlieb Steen & Hamilton LLP; Valerie Haertel, VP/director of investor
relations, Medco Health Solutions, Inc.; Jerry Hostetter, VP/director of
public relations and investor relations, Smithfield Foods Inc.; Deborah Kelly,
partner, Genesis Inc.; Mark Hynes, managing director of Global Investor
Relations Services for PR Newswire; Jack L. Kelly, co-head, industrial
research team, Goldman Sachs; Mary Beth Kissane, president and founder,
Corporate Perception Research; Sam Levenson, SVP Investor Relations, Sony
Corporation of America; William A. Relyea, managing director, H.C. Wainwright
& Co., Inc.; Diane Salucci, SVP, Bear Wagner Specialists LLC; Kurt Stocker,
member of the board of directors of NYSE Regulation, Inc. and chairman of the
New York Stock Exchange Individual Investors Advisory Committee; Anna Sussman,
director, Investor Relations and Corporate Communications, Pharmion
Corporation; Louis M. Thompson, Jr., partner, Genesis Inc., and managing
director, Kalorama Partners, and former CEO, president and board member of the
National Investor Relations Institute.

    About PR Newswire
    PR Newswire Association LLC (http://www.prnewswire.com) provides
electronic distribution, targeting, measurement and broadcast services on
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    Established in 1954, PR Newswire has offices in 11 countries and
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than 40 languages. Utilizing the latest in communications technology, PR
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United Business Media plc of London.

    Rachel Meranus
    Vice President, Public Relations
    PR Newswire


For further information:

For further information: Rachel Meranus, Vice President, Public
Relations,  PR Newswire, +1-212-282-1929, rachel.meranus@prnewswire.com

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