First Call, a leading information provider for investors, announced it will modify its earnings tracking system to accommodate forecasts provided in accordance with U.S. generally accepted accounting principles (GAAP).

Currently, First Call tracks only profit forecasts prepared on the basis of operating earnings, a measure that excludes one-time items such as profits from selling a business unit. These forecasts are aggregated into a so-called "consensus" number that provides some investors with a useful benchmark for gauging corporate performance. But others say the system can be overly simplistic, placing too much emphasis on a single number and causing investors to buy or sell securities based on whether a company makes or misses its forecast.

In the future, First Call will accept alternative bases of earnings, following the lead of Merrill Lynch's analysts, who now use a variety of metrics including GAAP-based earnings and related ratios and benchmarks. Merrill is believed to be the first big investment firm to adopt formal standards as a way to ease mounting investor frustration with the lack of generally accepted analytical techniques. This change reflects the growing importance of analysts in the financial reporting process and accompanying accusations that the firm was publishing overly bullish and biased stock reports.

In addition to the analysts' GAAP forecasts, First Call will also disseminate companies' actual GAAP earnings. Chuck Hill, First Call's director of research, said it will take some time for technicians to put the technology in place, but he expects the service will be available within a few months.

-Rosemary Schlank