FUN WITH NUMBERS

During the worst periods of the telecom bust, earnings season was filled with gaudy headlines proclaiming double-digit revenue drops and huge swings from profit to loss. While news like this may have caught people's attention, in many cases it was based on bad information. Most reports compared a given quarter with the same period a year earlier. Everyone knew that telecom was distressed, so comparing a bust quarter with a boom quarter only demonstrated how big the bubble was; it didn't reveal anything new. A better indicator was the comparison of a quarter with the one that preceded it. That at least showed how the market was trending, rather than the difference between where it was a year ago to where it was at the time of the last report. Now, however, the situation is starting to change. Though it's still the beginning of the earnings season, most vendors and carriers that have reported are showing revenues that are sequentially flat, give or take a few percentage points. With the bleeding having stopped, then, year-over-year comparisons will once again be relevant to the true health of the industry. While sequential changes should track the progress of recovery, comparing a quarter with the same period a year prior better takes into account issues of seasonality, which is vital, particularly when looking at industries dealing with consumers. Now that the doom-and-gloom headlines have abated, digging into more relevant numbers should give people the real story.