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sometimes resort to any means to keep them happy. This sometimes leads to irregular accounting practices to report good numbers. Many companies do resort to creative accounting practices to meet their numbers, but sometimes a company may push the envelope too much and this form of deception eventually catches up with the company, with disastrous results for its stock. You may have heard of some companies caught in this game having their records investigated and audited going back many years. Many companies going through such a process lose investors' confidence forever and may never regain their footing. Other companies may bite the bullet and report their not-so-rosy numbers but go on to blame other factors for their shortcomings rather than their own bad business practices. During the Asian financial crisis of 1998, many companies blamed their bad earnings on this factor even though it was hard to find a meaningful dependence on Asian markets for some of them.

Sometimes investors may have become accustomed to a company reporting great numbers year after year. Some companies may report 30, 40, or even 50% earnings growth year after year for a decade. But hardly any company can maintain this kind of growth indefinitely. So when the company finally begins to see a slowdown, it could take the investors off-guard and it may see a drop in its stock even though its numbers are still quite good. Dell Corporation is one such example. The market has always expected it to grow by 40 or 50% year after year. So when Dell grew by a lesser amount starting in 1999, its stock began to display signs of weakness unlike its explosive growth in prior years.

Investors may use different yardsticks to measure a company's viability when the earnings are released. Beating or meeting estimates is certainly good news, but estimates are rarely the only criteria used by investors. Many other factors may be considered, and the measurements may differ from company to company. Sometimes …