Heard the Whisper? Unofficially, 4Q Seems A Winner
Moyer, Liz, American Banker
If Wall Street speculation is accurate, big money-center banks could be in for another blowout earnings season.
The so-called whisper numbers for Chase Manhattan Corp., Citigroup Inc., and J.P. Morgan & Co. have begun to circulate among traders in recent days and, in many cases, those figures -- which represent unofficial forecasts of results for the quarter -- exceed the official average estimate of analysts as tracked by First Call Corp.
In some cases the discrepancies are quite large. For Chase the whisper number for fourth-quarter earnings ranges from $1.40 per share all the way up to $1.55 per share. Both are sharply higher than First Call's analyst consensus of $1.32 as of Monday.
Likewise, market talk has Citigroup earning around 76 cents per share in the quarter, compared with the official consensus estimate of 70 cents. One unofficial estimate for J.P. Morgan calls for fourth-quarter profits around $2.43 per share, compared with the $2 per share estimated by First Call's analyst survey.
Analysts spend a fair amount of energy calculating quarterly and yearend earnings estimates for big institutional clients. For the most part banking companies have typically met or slightly exceeded expectations.
Web sites that publish whisper numbers -- such as "earningswhispers.com" and "whispernumbers.com" -- claim they are more accurate than the consensus, but there is little evidence to prove it. "There are always whisper numbers out there," said Steven Eisman, an analyst for CIBC World Markets. "They can be important, but some you really have to question."
But some analysts privately admit they also like to track the whisper numbers -- the market speculation that crops up on on-line bulletin boards and other investor Web sites immediately preceding earnings season.
This time around, the speculation seems to be fueled by unexpectedly strong fiscal fourth-quarter profits released in recent weeks by Wall Street's big investment banks, analysts said. Those reports indicated "the dropoff in capital markets activities was not as significant as originally anticipated," said Ronald Mandle, an analyst at Sanford C. Bernstein & Co.
Double-digit profit increases at Goldman Sachs Group, Lehman Brothers, and Morgan Stanley Dean Witter & Co. portend strong gains in the capital markets divisions of Chase, Citi, and J.P. Morgan. "Once the brokerage numbers came out, the sense was that if the banks have picked up on any of that they would also do well," said Carla D'Arista, an analyst at Friedman Billings Ramsey & Co. …