The Tide Turns

Fifty seven analysts track Infosys from across India’s brokerages. Their jobs rests on their ability to read the numbers right. If there is a surprise, these 57 people will take a credibility hit. So the corporation needs to guide them correctly and also live up to their extended expectation. After all, if an analyst expects more from a company, he gets greater credit if the company exceeds even his expectations. Over the years, the analysts’ slack and greed took a toll on the company. Naturally, this took a toll on its top management, created boardroom exits, brought volatility to the valuations and triggered a confidence crisis in the tech space itself. Remember, the Tech space is a defensive one. Think about this. How many analysts lost their jobs for their inability to independently judge the fortunes of a company? Is it a company’s obligation to guide the analysts’ pack? The INFY saga only highlights the tenuous relationship between the company, the analyst community and stock valuations. At a time when things look better and the worst seem behind us, it is time for the stakeholders to re-evaluate their own obligations and responsibility. Valuations should not be the casualty for the lack of competence and the failure of consensus.

Forecasting is like turning lead into gold. – Philip Fisher.

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