What is a conference call?
A conference call is an event in which the company’s management team shares with investors about the the aspects of recent quarter and future or projected earnings growth.
A conference call can also be defined as a telephone call by which a caller can speak with several people at the same time, according to Merriam-Webster.
During the call, investors will listen to the top management team made of Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, etc, and senior vice-presidents. They will greet investors who attended the conference call and then continue discussions about the company’s fundamentals and other important aspects of the company.
During these discussions, they will focus on the performance of the company in the recent quarter and projected future performance and earnings.
The CEO can some times address potential issues related to the company such as privacy, politics, etc.
How many times do conference calls happen?
Since companies announce earnings every quarter and there are four quarters in a year; the conference call will be held four times a year.
As an investor, you don’t have to go to the location where the conference call is being held. Also, all investors cannot attend the call at the same time. For example, big companies like Google, Amazon, and Apple have millions of investors. There is no single location that can accommodate all of them.
To solve this problem, companies will have a live broadcast of the conference call on the internet and can be accessible even after the conference is done. Most companies take one step further and transcript the conference call in a written format to help all kinds of investors and interested readers.
Benefits of conference calls
This is a place where investors can have clarifications to particular problems they have about a company.
For those who have not invested in the company but want to learn why they should invest, a conference call can be beneficial.
The management team will clarify all sorts of issues such as:
- Missed earning expectations
- Political issues
- International issues such as the use of minors as workforce or conducting businesses with companies that violate human rights
- Data breach and privacy issues in general
- Lack of proper guidance
- What the company will do to further increase its earnings
- How much earning estimate for the next quarter and beyond,
- etc.
They can also add to why they:
- Had good earning
- Are expanding faster
- Think the future earnings will be much better
- Etc
By listening to the conference call, you can have a great answer to your problems. The earning report itself does not clarify everything for you. If you wanted to pull your money out and put it somewhere else; the conference call can keep you grounded.
They will tell you why you received fewer earning per share and what they are going to do about it. In addition, they will tell you why they are not sure about the direction of the business, etc. From these responses, you can decide to stay or leave the company.
