Should You Listen To "Whisper Numbers"?

These Web sites can help investors--but be careful

Just before Microsoft Corp. announced second-quarter earnings in July, scads of investors logged on to several "whisper number" Web sites claiming to offer the up-to-the-minute scoop on what the most plugged-in traders think per-share profits will turn out to be. Sure enough, when Microsoft finally announced its earnings--40 cents a share--at least two of the whisper sites, with guesses of 37 cents, were closer to the real number than the more widely available 35 cents-a-share consensus of analysts' published estimates.

More and more investors, seeking this sort of an edge, are logging onto Web sites that feature free whisper numbers (table, page 150E12). Among ones offering free access to whisper numbers are,, and

The way some whisper numbers are generated may be open to question, and some challenge the value of these figures for anyone but the most hard-driven day traders. In fact, John Markese, president of the American Association of Individual Investors, believes that the value of whisper numbers is next to nil for investors who have a proven buy-and-hold strategy. "Whisper numbers encourage short-term or frequent trading, and that in and of itself isn't a sound investing strategy," says Markese.

Still, if you're already planning to buy or sell a stock, it could be wise to use whisper information on a particular trade. "With a whisper number, you're using more information than with an analysts' consensus," says Charles Hill, director of research at First Call, a corporate earnings research firm. Indeed, First Call, which charges a monthly fee for its services that are primarily for institutional use, recently began listing its own version of whisper numbers on its Web site ( Hill maintains that whispers are, and should be, no more than a back-of-the-envelope calculation based on a company's earnings-reporting history. For instance, if Cisco Systems has beaten analysts' consensus estimates by a penny a share for the past three quarters, then the whisper number should reflect the analysts' forecast plus 1 cents. "The word `whisper' has the connotation of something mysterious and secretive. But when you look at it this way, there's very little mystery," says Hill.

Although the origin of First Call's whispers may be clear-cut, the source of others, especially ones gleaned from at least two of the whisper Web sites, are vague at the least., for example, doesn't reveal how it arrives at its figures and did not return calls requesting information. But Paul Hauck, head of, a subsidiary of Citigroup, says its numbers are culled by scanning message boards and news media via proprietary software. Still, the Web site concedes the method is "untested and unproven." covers 200 stocks but will go to as many as 1,000 by third-quarter reporting season.'s numbers, meanwhile, are gleaned from analysts that owner and founder Shannon Puls, along with his brother, Drew, survey daily, Shannon says. The site covers 4,000 companies. The two occasionally grill corporate investor relations officers, and also factor in historical earnings information to come up with estimates. Shannon Puls says using historical information is also helpful in screening out would-be stock manipulators, who have been known to e-mail him unrealistic numbers.

If you're hooked on Web whisper numbers, think before you trade on them. Experts point out that it's difficult, if not impossible, to gauge the accuracy of these electronic tipsheets. "They don't post much historical information, so their track records aren't easily discernable," says Mark Bagnoli, a Purdue University finance professor and the author, along with Susan Watts from Purdue and Messod Beneish from Indiana University, of a study on whisper numbers. Indeed, both and feature the whisper number only on the day a company's earnings are announced., however, will soon sell historical data as "premium" content, and will start listing free historical numbers next month. does post past whispers on select stocks but goes back only one quarter.

Even so, whisper numbers in general can be valuable to investors because they can be more accurate than analysts' forecasts. Bagnoli, Beneish, and Watts, for example, looked at reports of whisper numbers found on the message boards of Web sites such as Silicon Investor, Motley Fool, and Yahoo! Finance from January, 1995, to May, 1997. They compared 943 whisper figures with some 3,500 analysts' forecasts for 127 companies. The study found that 78% of the whisper numbers exceeded analysts' forecasts, demonstrating that analysts tend to be conservative in their estimates. But even though the whispers gleaned from the Internet tended to be too high, they still were much closer to the companies' actual reported earnings.

Subsequently, a Bloomberg study concluded that the figures posted on and were off by 21%, while analysts missed by 44%. One reason for the whisper sites' success may be timing. "Whisper numbers are typically arrived at or posted closer to actual earnings than the analysts' consensus, and that gives them an edge," says Bagnoli.

Both studies found investors could have made money trading on the difference between whisper numbers and analysts' forecasts. Hot stocks like Cisco, Dell Computer, and Wal-Mart make huge moves when companies report quarterly earnings, depending on how reported profits compare with the ever-popular whisper numbers. "By buying companies whose whisper numbers are larger than the consensus estimate, and shorting companies whose whisper is below the consensus, you can make a profit," says Bagnoli.

Even if you don't use whisper numbers for trading, whisper sites may contain other valuable information., for instance, features a free earnings calendar and links to conference call Web sites where companies discuss earnings. On, you can get the most recent opinions of some 900 analysts, retrieve analysts' warnings on individual companies, and view an earnings calendar, also for free. Premium services on, which will cost around $10 per month, will include historical market statistics, and a comprehensive list of analyst ratings. Whether you use whisper numbers for trading stocks is up to you, but there's one thing for sure: With these Web sites, whispers are getting louder and louder on Wall Street.

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