I don't know the exact details, but almost every day on the business headlines I read either that the economy is headed toward disaster because some large corporation fell below its quarterly profit expectation, or that we are headed toward prosperity because a company exceeded it.
For example, from Bloomberg, "Best Buy, the largest U.S. electronics retailer, is among companies seeing demand pick up. The Richfield, Minnesota-based merchant last month reported fourth-quarter profit that exceeded analysts’ estimates as discounts helped boost sales.
Carnival, the biggest cruise-line operator, last month raised its full-year profit forecast as ticket prices rebounded from 2009’s lows amid more bookings."
Are there confidence intervals around these forecasts? Merely exceeding analysts' estimates doesn't seem like news. Furthermore, they provide an explanation--the treatment effect of discounts--that can explain this effect independently of economic recovery.
I guess I don't see how this is news. Does anyone know more about profit forecasting? Are they point estimates or confidence intervals? The same thing with the Dow Jones Index: people seem to interpret random fluctuations as meaningful with absolutely no accounting for margin of error in estimates.