> I think both figures are useful - year over year (or quarter over
> quarter) is something that "the street" looks at and affects stock
> price.

Exploiting "noise" in the profit signal to try and make money is fine, 
but...

> It's the beginning of building a trend -

...how can you use just one or two points of data to decide that a *trend* 
is starting?

> and if the analysts use
> it as one indicator of a company's direction (from a profit standpoint),
> it makes sense to be aware of it and know where you're going.

I don't think any real analysts look at solely the headline numbers to 
decide what to do.  They will look at the detailed result history to 
determine if the trend is changing, they can't do that with just one or two 
numbers.

For example, suppose your monthly profit fell from 104 last month to 90 this 
month.  Some people then go off on one based *solely* on these figures, they 
send out emails to staff saying that profits have dropped by 13% and it's 
been the biggest drop for over a year blah blah blah", they try to "correct" 
whatever they think has gone wrong this month etc.

Then next month the profit is 107, they feel all good about themselves and 
maybe get a pat on the back from their boss if he is equally stupid.

But, take a look at the monthly profit figures running up to the 104,90,107 
incident:

38,64,45,67,50,50,76,66,66,77,70,76,81,73,91,82,80,73,76,93

The clever person will notice that on average profits seem to rising at 5 
per month, and try to find the reasons for why this is and how to go about 
increasing it.  The stupid person wastes effort on trying to explain and 
correct the change every month.

It's not just profits, but plenty of other things (like production volumes) 
that suffer from people trying to analyse the noise.

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