Briefly Noted

    Hearing Aid: What to Listen for During Quarterly Earnings Calls

    First-quarter earnings calls are just beginning. What should investors listen for?

    Manny Weintraub, formerly managing director of Neuberger Berman and now head of Integre Advisors, an asset management firm, has some tips.

    • Keep your “spin meter” on high. The beginning of the call always gives the good news. Start by listening for the non-recurring items, and then make a non-judgmental list of positives and negatives that does not seek to defend or second-guess previous decisions.
    • Focus on gut instinct honed by experience, as opposed to rationalizations. Do Do you feel better or worse after this call?
    • Focus on cash flow and cash generation, and on the balance sheet.
    • Put a lesser focus on quarterly earnings statements, such as whether a company beats estimates by a penny or misses by a penny.
    • Do not be a knee-jerk contrarian—sometimes a miss really is a miss.
    • Always focus on the revenue line, which is much harder to fudge than earnings.
    • Look less at one particular statistic that everyone tells you to focus on, and more holistically at the broad trends and whether they are in line with what you expected when you bought the stock.

    Now On-Line: NASD Arbitration Awards Database

    NASD has unveiled its newly developed NASD Arbitration Awards Online database. The database's enhanced search capability enables users to search for awards by case number, by keywords within awards, by arbitrator names, by date ranges set by the user and by any combination of those features. Arbitration awards from January 1989 through the present will be available in the new database. Searches are free, unlimited, quick and simple. Arbitration awards can be viewed on-line, printed or downloaded as text-searchable PDF files. The awards will be posted to the site within a week of being served on the parties.

    The new Arbitration Awards Online system can be accessed at, through the Get Arbitration Awards link on the Arbitration & Mediation page.

    The Train That Never Stops: Keeping Your 2007 Estimated Taxes on Track

    While most taxpayers settle up with the IRS once every year by mid-April, those who are required to pay estimated taxes must settle up four times a year.

    Who must pay?

    Individuals whose tax liability for the year, after credit for withheld taxes, is $1,000 or more are required to pay estimated taxes. Estimated tax is the method the IRS uses to collect tax money on a pay-as-you-earn basis for income that is not subject to withholding. Taxpayers who have other significant income that is not subject to withholding may be required to pay estimated taxes. Examples include investment income, alimony, and rental income.

    The IRS divides the year into four payment periods; for 2007 estimated tax payments, those due dates are: 1st payment by April 17, 2007; 2nd payment by June 15, 2007; 3rd payment by September 17, 2007; and 4th payment by January 15, 2008. Each payment represents roughly one quarter of the tax you will owe for the year.

    The safest route to paying enough in estimated taxes is to use the prior year. That means if your adjusted gross income for 2006 was $150,000 or less, and you are either single or married filing jointly ($75,000 for married taxpayers filing separate returns), you can avoid paying a penalty by paying estimated taxes equal to 100% of the total tax shown on your prior year’s tax return. If last year’s adjusted gross income was more than $150,000, the safe harbor amount is 110% of the amount of total tax shown on the prior year’s tax return.

    Based on your situation, if you believe using the prior year’s safe harbor may result in overpayment, there is another option available. You can avoid paying a penalty if all your estimated payments for 2007 eventually add up to 90% of this year’s income tax liability.

    If you or your spouse has wage income in addition to untaxed earnings, you may be able to arrange for extra withholding to cover your estimated tax bill. There are two ways to do this. You can reduce the number of allowances you claim, or you can request a specific “additional amount” be withheld from your paycheck. Since it’s difficult to determine how much changing your allowances will affect your withholding, it’s best to calculate your estimated tax bill and request to have that amount withheld over the course of the year.

    To file estimated taxes, use Form 1040-ES, Estimated Tax for Individuals. This form includes instructions, a worksheet, and four numbered payment vouchers.

    If you do not pay enough estimated tax by the due date of each of the payment periods, you will be assessed an estimated tax penalty that is due on your tax return filing date. The interest rate used to compute the penalty changes quarterly, based on market conditions. The penalty applies even if you are due a refund when you file your income tax return.

    Source: The American Institute of Certified Public Accountants (AICPA).