(September 25) – “It is getting harder than ever for companies to meet analysts’ expectations on Wall Street, writes Molly Williams in today’s Wall Street Journal.

“Look no further than Intel. When the chip maker warned late Thursday of weaker-than-expected revenue, many on Wall Street were stunned. Intel shares plunged 22% Friday in heavy trading, as investors scrambled to bail out.”

“Get used to it. Many more companies are likely to surprise Wall Street with their earnings because of new selective-disclosure rules from the Securities and Exchange Commission, market specialists say. That may make enterprising research from analysts all the more important to investors. Such original work was in scarce supply in the Intel case, with a notable exception. One analyst hit the nail on the head several weeks ago regarding Intel’s problems.”

“The SEC’s new regulation on selective disclosure, which goes into effect Oct. 23, will make it much harder for companies to privately guide analysts into lowering or raising their estimates. The result is likely to be less accuracy from analysts in making estimates and more earnings surprises, as companies make disclosures to the whole world, rather than filtering news through a select few.”

“Intel, which has had a policy of broadly disseminating news of changes in its quarterly outlook since 1996, may be a model of the new way of doing things. Its experience last week gives everybody else a taste of what can happen when a company has negative news to dispense.”

” ‘You can’t give guidance to individual analysts any more,’ said Chuck Hill, director of research at First Call/Thomson Financial, which tracks analysts’ estimates. ‘That will inevitably lead to wider ranges in estimates, and more surprises.’ “

“And with more surprises, there is likely to be more volatility in individual stocks — and even in the entire market, as the Intel example also showed Friday.”

“Bad news generally drives down a stock price whether word dribbles out or bursts on the scene dramatically. But the market impact is more diffuse when filtered out through analysts, market experts said. Sudden news, and big moves in stocks, can lead to even sharper swings than might otherwise have occurred.”