Into the 2Q Print

It was much like any other meeting room, a boardroom table, a Polycom phone, a video screen on the credenza, leather chairs, too many, cluttered, slightly stuffy. We might have been anywhere, San Diego or Boston, but we were in Palo Alto. The receptionist, a bored young woman of about my age, offered us coffee. Tom declined, so I did too.

Visitors normally get the view, it’s a thing, but Tom was having none of it and we sat with our backs to the briefly glimpsed parking lot with the eucalyptus trees shimmering in background. Six months ago, the lot was half empty, but this time it was jammed with Beamers, Porsches, Tesla. Business must be good at Obsidia, I said.   

We stared at a big poster of the Golden State Warriors; the team were standing in a storm of gold confetti holding a trophy aloft.

Azi Azarian, CEO and Founder, burst into the room, and seemed surprised at the seating arrangement.  Dark cropped hair, nine o’clock shadow, bulging biceps, and camo pants; Azi looked like he was on an R&R break from a combat zone. Rhett Turner, VP of Investor Relations, followed Azi into the room. Rhett looked irritated, like he didn’t want to be there.

Tom Block, my boss, the Senior Analyst, was a sickly-looking man with persistent rosacea and a 1980s comb-over. Wearing a rumpled gray suit, suspenders, he had a cheap, over-the-hill appearance that set him apart from his Wall Street peers. The dull gray man from Richtman Fuchs with the exotic, beautiful and super smart Associate – Clara Chung – that’s me, the latest addition to his software coverage team, and the first-ever woman! I wore a black dress-suit, white blouse, sensible pumps, the same thing every day. I looked like a million bucks, eye candy for the boys.

The boys were definitely interested in the eye candy. I fussed at a print copy of the Obsidia income statement and pretended to scan the numbers. It was performance art; I have great short-term memory. I don’t need notes.

“So, what can you do for me today?”, said Azi smiling, clasping his big hairy hands together. Armenian hands. Rhett leered at me, like he’d had one too many at a sports bar.  

“Thank you so much for seeing us at such short notice” said Tom, oblivious or complicit, “we know how busy you are at the end of the month and ahead of the new platform launch, but we’re touching base with our most important companies before we head into The 2Q Print”. The Print being the end-of-quarter reporting, the conference calls, tiny-font spreadsheets, the sixteen-hour workday. I type fast, I’m fastidious, I can sit at the computer screen for fifteen of the sixteen hours without flagging, and still look gorgeous. I’m good under pressure; it’s another of my superpowers.   

“How is the Full-Court-Press going?” said Tom.  

CEO’s love to hear their idioms and catchphrases quoted back to them. A corporation is like a novel: it is an invention of the mind. It has setting, characters, plot, conflict, and sometimes the CEOs are really good storytellers; they create a whole new reality out words. But what good are words if nobody listens or they go unread?

Azi launched into his elevator pitch, explaining how the Full Court Press - now abbreviated to “FCP” –was translating into something called “go-to-market motion”, and a “fly wheel of recurring revenue”, and other tiresome MBA stuff. Tom scribbled down the nonsense onto his notepad. when suddenly Azi’s rap veered into hard numbers, sales, margins, and other actually useful stuff, which Tom transcribed neatly in the margin. 

Rhett jumped in and interrupted his boss. “Before we get too much further into this meeting”, said Rhett, “I just want to remind you that it’s the last week of the quarter, so we are in the quiet period now, which means there will be no updates to previously issued guidance”.  Analysts hate those three words; it’s like being told by the Dentist to floss your teeth every day. Rhett looked at Tom and me, sternly, but I sensed that he was really speaking to Azi, his boss.  

“Aah, such bullshit!” said Azi, “these rules and regulations, they’re killing me”. Azi wasn’t your typical CEO, the cool calculating sociopath. He was different sort; seat-of-the-pants, take-no-prisoner, coming-to-America rags-to-riches sociopath.

“It must be hard going right now, what with IT budgets being so constrained”, said Tom. It was an open-ended fishing question. Fishing for Alpha; that nugget of information that nobody else has. 

There’s a fun story: the efficient-market thesis story. A wizened professor of finance is walking down bustling 5th Avenue in New York City, with a student, who spots a $20 bill on the crowded sidewalk. The student is about to pick it up when the professor stops him and tells him not to bother. “If it was real, someone would already have picked it up”, says the Professor.  

In the market, everything that can be known is already known, but only because there’s thousands of us out there, fishing for Alpha.

Azi was leaning back in his chair, arms folded behind his head, like he was sunbathing on his big yacht in Portofino or Ibiza. For a moment, I thought I’d accidentally told the professor’s story out loud, and blushed, but then I realized that he was still contemplating Tom’s question about corporate budgets.   

“We just got back from Redmond” said Tom, taking up where he’d left off, the Microsoft boys thinks tight budgets favor them. Corporates are risk-averse right now, so they go with what they know, not new untested platforms… like Obsidia”. Clumsy I thought.

It was like a red flag to a bull. Azi sat forward, slapped his big hairy hands on the table, making me flinch. 

“What do I have to do to get you to upgrade our stock?”, said Azi. There was something threatening in his manner, like he might leap across the table and punch Tom in the face. Rhett looked horrified by the question, totally not protocol, but it was out there now, couldn’t be unsaid.  

“Pardon”, said Tom, flustered.

“You’re all the same, for chrissake!” said Azi “The JP Lewis guy touched base – Kellerman touched base, you touched base, everybody’s touching base!  Next day he drops the Price Target on our stock and downgrades Obsidia to Neutral based on some lazy-ass macro argument, like he’s the only one that knows what’s happening in the real world! Then Kellerman downgrades us too! It’s all over Bloomberg and CNBC and $15 billion of value is wiped out, just like that”. He snapped his fingers.

“Nobody ever got fired for buying Microsoft”, said Tom. Tom was an avid fan of Microsoft, and he had strong BUY rating on the stock. Microsoft was a huge source of underwriting and M&A business for Richtman Fuchs, so the bankers loved Tom for his unyielding support for the software giant. Obsidia was just a trading stock – commission dollars – nickel and dime stuff.

Azi again seemed poised to leap at Tom’s throat. Jacked arms, big hairy Armenian fingers, it would be over in an instant.  Rhett looked disgusted too, but a switch flipped, and Azi gave us a wry grin.

“Did you see the game last night?” he said.  

I do hate it when they go bro-mode and start talking about team sports. It’s never figure skating or gymnastics. It’s not just a glass ceiling that women have to contend with on Wall Street, it’s also the locker room door.

Tom was suddenly animated in a fan-boy way that I found slightly nauseating. “Yeah! What a fantastic game!”

I’d been up until 2.00am writing an initiation report that Tom needed for a new company. We were late for a deadline. He needed it first thing, but then – first thing – he needed something else.

Maybe it was for my benefit because Azi was looking at me when he said “The Warriors were down 15-points at the end of the first quarter, but Curry and Thompson rained in 3-pointers. By half-time the Warriors were up double digits. It was a blowout win”.

“Wow. Wish I’d seen it”, I said.

“Yeah, it was a second quarter for the ages”, said Azi. The meaning of the non sequitur couldn’t be clearer, or could it? Tom was staring blankly at the poster on the wall as if daydreaming.  

The rest of the meeting was dull, conventional stuff. Azi started lecturing us about generative AI and how it was going to change everything and everyone, including Wall Street. All very amusing and mildly threatening.  Tom blanched, presumably at the thought that machines might steal his seven-digit paycheck.

Azi left us with Rhett and the meeting wound down. Tom went to the bathroom, and I made small talk with Rhett, avoiding sports. I needed him to pick up then phone when I call with a question, so I made nice, flirted even.

“You won’t be publishing anything on this meeting, right?”, said Rhett running his eyes up and down my body.

+++

The black limo met us outside the Obsidia office building. Tom and I sat on the plush backseat, and I immediately felt very weary, ready to nap as we drove along Highway 101 back to the office in San Francisco, but Tom was all action, tapping stuff into his iPhone.  

“Did you see Azi’s body language when I mentioned Microsoft? I really landed a body-blow to that bastard”, he said.  

Delusional, I thought.

“We need to take the numbers down, keep the same multiple, but I’m guessing at a $60 Price Target”, said Tom. 

It wasn’t a guess; it was an instruction. I stifled a yawn, opened my laptop and started up Excel. The answer is $60, now how to get there?  

“I’ll phone Ray and get approval for a downgrade to Sell”, said Tom. Ray was head of Research, back in New York. Ray reviewed all Ratings Changes, before they went to the compliance department for legal scrutiny.  

I lowered Obsidia’s growth-rate, deducted a few basis points from gross margins, and stared in disgust at the second quarter revenue and earnings disaster that I’d just concocted. Our numbers would be the lowest on the Street, which would cause a big fuss, but the Price Target was close to $60. Tom guessed right.  

Meanwhile Tom was struggling to justify the Downgrade to Ray over the phone. “No, no, nothing came out of the meeting”, he said and paused. He was searching for something more, something convincing, then it came to him “it’s the macro environment, Ray. We’ve got to adjust our numbers to reflect the macro reality”.  

Macro. The easy out. I hoped that Ray might hang in there, and make Tom squirm, but he didn’t. Probably way too busy. A few minutes later I was cc’d on an email from Ray, approving the Downgrade.

“Are you sure about this Tom?”. I was more intrigued than I was disappointed. Tom always harped on about how important it is to have primary data, bottom-up stuff, it’s what our clients need, but here we were fresh from a fishing trip without a fish, without a single data point. It was like a case study in ethical failure.

Tom was irritated by my question. “Just get the note written up for me so that I can review it at the office”, he said. Terse.

“What about that Warrior game stuff, the second quarter turnaround?” I persisted. Surely, he’d read between the lines, hadn't he?

“Azi was just spit-balling. He was trying to impress me. Mano a Mano” said Tom, signaling with impatience that the discussion was outside my wheelhouse.

It wasn’t my call. I was just following orders. A few minutes later, somewhere near the San Mateo flyover, I fell asleep in the backseat of the limo, and sweetly dreamed that I was somewhere nice. Portofino or Ibiza.

+++

Obsidia posted monster results, of course. The second quarter print blew the analysts’ numbers completely out of the proverbial water.  

Rhett phoned and told me that Richtman Fuchs is full of idiots and hung up before I had a chance to agree.

The market opened at 9.30 am in New York, but it was still dark over here, 6.30 am in San Fran; it felt dark too. Long-only investors piled in, the hedge funds scrambled to cover, and by day-end OBSD stock was above $100 a share. The cable news people shredding us analysts and Tom’s lonely Sell came in for particular ridicule, including a pithy “blame it on the macro” critique that appeared on the back page of the Journal.  

Tom avoided me completely, but I spotted him gossiping with my teammates, my peers, both men, at the water cooler. I decide to lean in, Sheryl-Sandberg-style. I grabbed a one-page document off my desk, as if I was on a mission to the photocopier.

“Clara was pretty persistent”, I overhead Tom say, “she felt the numbers were too aggressive, and I guess I should have spent more time on it, but I was tired, and…”

“Hi guys!” I said, all cheery, like I didn’t have a clue what they were talking about.

“Oh, Hi Clara. We were just discussing the game last night”, said Tom, sheepish, blushing and turning the rosacea an angry red.

 “Yeah! What a nightmare!” I said.

“I don’t know what you are talking about!”, said Tom, confused.

“The Point Guard got carried off the court with a herniated testicle”, I said.

Tom winced.

“There’s talk of him retiring at the end of the season. The team’s getting old, and they need new leadership, apparently”.

The two associates looked shocked, and Tom looked like he was in an agony of discomfort.  

“I’m just kidding! Just spit-balling. Mano a mano” I said.  

A million bucks, eye candy, I waltzed along the corridor in the direction of the photocopy room, a freshly updated resume in hand. I heard that the Kellerman analyst had just been let go.