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Friday, July 06, 2007

What are Forward Looking Statements?

The red herring prospectus for any company coming out with a public issue will contain forward looking statements that can be identified with phrases like “will”, “achieve” , “aim”., “estimate”, “believe”, “expect”, “shall”, “project”, “pursue” etc..that shall describe the objectives, goals and mission of the company.

These forward looking statements are subject to risk, uncertainties, and assumptions that may result in the actual results being materially different from those contemplated by such forward looking statements.

Important factors that can contribute to the actual results being materially different from those projected include:

  • The company’s ability to formulate successful strategies, meet growth targets, manage expansion and keep in sync with technological changes
  • Increasing competition from players in different market segments
  • General economic, geo political and business conditions within and outside the country
  • Exchange rate fluctuation with respect to a basket of currencies
  • Changes in laws and regulations governing the industry in particular

Therefore the market disclosures about the future outlook of the company made by the entity from time to time are only estimates and must be understood in conjunction with the risk that a company faces at different stages of its growth/life cycle. This is what is popularly referred to by analysts as “Safe Harbor.”

1 comment:

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