Biotech Values

[DewDiligence]

Hoaxer Haunts Earnings Calls

http://online.wsj.com/article/SB120301945499169247.html

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By BETSY MCKAY
February 16, 2008

Some big companies have had a surprise during their earnings conference calls this quarter -- and it has nothing to do with the weak economy.

At least seven times just the past three weeks, a mystery caller has cleverly insinuated himself into the normally well-manicured ritual of the quarterly calls. As top executives of publicly traded companies respond to securities analysts' questions about their balance sheets, he impersonates a well-known analyst to get called upon. Then, usually declaring himself to be "Joe Herrick of Gutterman Research," he launches into his own version of analyst-speak.

"Congratulations on the solid numbers -- you always seem to come through in challenging times," he said to Leo Kiely, president and chief executive officer of Molson Coors Brewing Co., on Feb. 12, convincingly parroting the obsequious banter common to the calls. "Can you provide some more color as to what you are doing for your supply chain initiatives to reduce manufacturing costs per hectoliter, as you originally promised $150 million in synergy or savings to decrease working capital?" [ROTFLMAO!]

Analysts say the caller's questions, though credibly phrased, are too off-target for a real analyst. It's more like "consultant-speak," says a disdainful Bryan Spillane, a Banc of America Securities analyst, a victim of one of Mr. Herrick's impersonations. Analysts deal with often-wonky financial details, but "savings per hectoliter" rarely comes up.

But many CEO's have had more trouble telling the difference. Most have gamely tried to answer the questions. Mr. Kiely and two other Molson executives stuck politely with the caller through three detailed follow-ups. Timothy Wolf, the company's global chief financial officer, closed by telling him, "We think we will have some more positive encouraging things to share with you next month in New York," according to a transcript of the call. A Molson spokesman said that to him the caller sounded legitimate at the time.

Etc.
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