Why Company Results are Important

Ah earnings season. Got to love those times in April, July, October, and January when the day of reckoning arrives for those public companies in the security space. Did they hit their numbers? Did they show the right type of growth? Most importantly from a stock price perspective, did they manage expectations correctly on Wall Street?

As public security companies announce their earnings, this will be something that I track on the blog and in The Daily Incite. Why? Because it's important and not just from an investment perspective. Since I believe that big is the new small and that the inevitable macro trend is towards consolidation of security capabilities and functions, the big companies are very important and the big companies are publicly traded.

That means that every 3 months we get a great view into their businesses. What is hot? What is not? How are things doing geographically? Did a missed product transition hurt business? You can get all sorts of tidbits just from listening. Obviously I have a different perspective than a financial analyst and I also look at things in terms of years, as opposed to months.

There are either virtuous or destructive cycles in this business. Companies that are doing well most likely continue to do well. They can invest, acquire and leverage existing customer relationships. Those on the wrong side of a cycle, lose momentum, customers, employees and eventually the ability to keep investing to stay out front. So, from an end user perspective, you want to associate with winners and tracking them every 3 months is one way to keep score.

Also to reiterate my financial disclosure policy, I do not hold the securities of any publicly traded security company that I cover. Mutual funds I own may, but I have no control over that or any influence on the investment or management of the company.