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THE DAY AHEAD: RegFD + investment conferences = a lot of press releases

Was it just a coincidence that a slew of semiconductor companies--Cypress Semiconductor (NYSE: CY), Vitesse Semiconductor (Nasdaq: VTSS) and LSI Logic (NYSE: LSI)--happened to kick off the week with profit warnings?

Not if there's a big semiconductor investment conference starting. Morgan Stanley Dean Witter is holding a conference Monday through Wednesday. Now, all those companies weren't scheduled to present Monday, but there'll be enough gloomy chip news to connect the profit-warning dots.

Regulation FD (Fair Disclosure) is producing quite a glut of press releases. Companies now feel obliged to tell investors how their businesses are doing twice a month.

The regulation, the brainchild of the Securities and Exchange Commission, dictates that a company must tell the public whenever it tells Wall Street anything. That means presentations at investor conferences are now Webcast. Often press releases are put out ahead of presentations just to put the news out ahead of time. If a company burps, you get a press release. If the company's outlook changes just a tad, you get a press release. And if nothing changes, you get a press release.

That's why the profit warnings flow ahead of investment conferences; CEOs can't give analysts any new information without a statement.

Sanmina (Nasdaq: SANM), an electronics contract manufacturer, lowered its revenue targets late last week, a few days ahead of its presentation at the Morgan Stanley conference.

With Bear Stearns and Merrill Lynch holding media and Internet conferences this week, respectively, you can expect a few more updates coming from companies presenting at these investment shindigs. Even if there isn't anything terribly new to report, companies will still say something.

    SAN FRANCISCO--Company.com said Tuesday that it is on track to post revenue growth of 10 percent in the first quarter in line with previous projections.

    "This is on track with guidance we gave last month," said I.M. Hipceoguy. "We just wanted our shareholders to know that business has not gotten any worse."

We're not going to complain about more information, but there's a limit.

Qwest Communications (NYSE: Q) is an example. Qwest reiterated its growth targets for 2001 last week, but the company said the same thing just a month ago.

Nothing changed, but the company felt compelled to tell us things weren't unraveling as its peers struggle.

The real reason Qwest issued a statement was a speech by CEO Joseph Nacchio at the National Association of Regulatory Utility Commissioners' winter conference. For Nacchio, it was a case of the same story told to different folks.

Texas Instruments' recent revenue warning was a little more newsworthy, but the timing was forced by the company's analyst meeting last Wednesday. The company said revenue would be down 20 percent in its current quarter, compared with its previous projection of a 10 percent decline.

Back in the days when TI execs could tell analysts about its outlook, the company probably wouldn't have said anything. After all, the slowing economy is still hurting TI. In other words, nothing changed from TI's last warning.

Luckily, investors sniffed out the TI release. Shares remained flat because there were no surprises from TI. We'll probably hear from TI again, especially if revenue will be down 22 percent.

So how do you know when you should wig out over one of these RegFD-inspired press releases?

Look for these two items:

• Is there anything new? Does the company statement merely reiterate what it said before? If so, there's no reason to worry.

• Is the current warning the result of a company problem? Let's say a company gave a so-so outlook a month ago and blamed macroeconomic conditions. If the company still sings the same macroeconomic tune, you can rest easier. If that company says a month later that it is cutting targets because of internal issues, you should get worried. If execs resign, expect the worst.

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