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THE DAY AHEAD: Behind Juno&#039&#039s earnings slip

COMMENTARY -- Wasn't it interesting how Juno Online's earnings happened to squirt out ahead of the official announcement? Unlike those rare moments when a company releases earnings early, Juno's slip wasn't an accident.

Here's what happened. A few hours before market close on Wednesday, CNet Networks, publisher of this site, broke the news that the company was planning layoffs ahead of its earnings release. According to Juno spokesman Gary Baker, Reuters wasn't pleased that it didn't receive word of the cuts.

Since the market had closed and the Internet service provider (Nasdaq: JWEB) wanted to keep Reuters happy, Juno CEO Charles Ardai decided to spill the beans that the company would top estimates. The company gave Reuters "a piece of the earnings" so the news service could have "balanced coverage," said Baker. Translation: Juno could placate Reuters and let its upside surprise minimize the layoff news. It's spin 101.

Apparently, it worked. Reuters at 6:35 p.m. EST reported that Juno's net loss would be $11.6 million, or 29 cents a share. The results easily topped First Call estimates calling for a loss of 52 cents a share.

By leaking earnings early, Juno did a great job of getting attention. Amid the barrage of tech earnings, it's safe to say that Juno could have been lost in the shuffle. Juno followed up with its actual results Thursday morning and gained 9 percent on news it would cut its cash burn rate dramatically. Juno closed up 5 percent to $3.78. Juno milked the attention until its conference call at 5 p.m. EST.

Is the Juno leak a violation of Regulation Fair Disclosure, a Securities and Exchange Commission rule dictating everyone gets the info all at once? Nope. The press is excluded from RegFD. The wire services are classified as broad dissemination points. If Juno told an analyst it would top estimates, the company would be in serious trouble.

The press exclusion is a good thing -- that way journalists can duke it out for scoops.

The truly bizarre part of this tale was how planned the leak was even though it initially appeared like Ardai just happened to mention it. Baker said Juno's lawyers gave the green light. And corporate lawyers aren't known for winging it. Baker said there was no harm because the leak occurred after the market closed and before Juno's official announcement Thursday morning.

Even more bizarre was our checks with the SEC. Spokesman John Heine said he couldn't comment on specific examples -- real or hypothetical -- where RegFD would be a problem. "We're not in a good position to hold forth on RegFD," said Heine.

Luckily, there's security lawyers for that sort of thing.

The definition of 'some' and 'may'

It's not exactly the "what the definition of 'is' is" debate, but there was a lot of quibbling over the meaning of "some" and "may" in Corning's (NYSE: GLW) outlook.

Corning topped estimates, but analysts wigged out Thursday over the following outlook:

    "We expect the telecommunications market to experience some softness due to ongoing issues with capital availability. Several customers in both our optical fiber and photonic technologies businesses have recently indicated that their order rate may be lower and more uneven than previously expected in the first-half of the year."

Based on that paragraph, Salomon Smith Barney and Merrill Lynch downgraded Corning. The downgrades came before Corning's conference call Thursday morning.

On the conference call and on CNBC, execs emphasized the "some" and "may" part of their outlook. Simply put, Corning wasn't seeing a slowdown just yet. What you have here is the gulf between long-term and short-term interests. The downgrades are based on the short-term stock hit. In the long run, Corning may not see any problems ahead.

"As we hear from customers and do our own analysis we pass it on to investors," said CFO Jim Flaws. "When we see anything but a flat-out run, we want to pass that on."

You can't fault a company for being transparent, but investors didn't bite. Corning closed down 20 percent to $56.25.TDAIN


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