So anything less than perfection triggers painful share price declines that are usually followed by partial recoveries when shareholders calm down. At least that's been the pattern over the last couple of months. Buying after sharp selloffs, however, isn't always a foolproof strategy. If a stock's growth rate is revised down and the share price drops even more, it may be a smart buy. But watch out if announcements call into question management's ability to forecast key trends.
Investors are likely to avoid the stock until they start to believe the company's projections again.
For two years, CEO C. Michael Armstrong has been trying to make the company less dependent on traditional consumer long-distance service, which is clearly in decline. And it was starting to look as though he was succeeding. Then came Tuesday's announcement. First-quarter earnings weren't so bad, but the company cut its revenue and earnings forecasts for the rest of the year. The only division that appears to be on track is wireless.