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Executives and analysts lose fear of forecasting. Must be good times.

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NEW YORK (AP) -- All it took was one good year for the fears of forecasting to subside.

At Walt Disney Co. (NYSE: DIS), embattled chief executive Michael Eisner proclaimed earlier this month that earnings would grow at a double-digit rate through 2007. AT&T Corp. (NYSE: T) recently declared that its long-shrinking consumer telephone business would begin to grow again in 2006, details to follow.

In the bubble days, such multi-year prognistications of sales and profits were common among both companies and Wall Street analysts.

But once the bear market exposed those forecasts as folly, companies stopped discussing their profit "expectations" for any period beyond the immediate future, complaining of a "lack of visibility" in the market and the economy. Many Wall Street analysts also turned squeamish as the economy stumbled and the market dove, refusing to forecast earnings more than a few months or quarters ahead.

Now, gray skies having cleared up, "visibility" has presumably improved and lessons learned about the perils of forecasting are being cast aside by companies.

And a growing number of analysts, despite how badly they were misled just a few years back, are herding along for the ride, predicting stock prices based on these long-term earnings projections. Among the analysts surveyed by Thomson First Call, there are about 7,600 published forecasts for this year's earnings at the 500 companies in the Standard & Poor's 500 index. Of those forecasts, 2,100 extend through 2006.

While it's standard practice in corporate finance to value a company based on a detailed five-year estimate of sales and expenses for that business, one might expect analysts to be more cautious in publishing those projections after all the botched forecasts just a few years ago.

To be sure, today's long-range forecasts are more modest than the grandiose projections of the boom years.

But regardless of magnitude, if it was too difficult to predict the future when times were tough, there's little scientific reason to suggest the art of forecasting gets easier when the financial climate improves.

A more likely explanation is that prosperous times breed optimism, fueling undue confidence in one's ability to predict the future. And considering the multiple uncertainties hovering over the economy now, it might be argued that even near-term prognostications should eyed with suspicion.

Indeed, there's ample reason to question Disney's assertion it can "deliver growth in earnings for the full year of 50 percent or more."

A major driver in Disney's strong performance during recent quarters has been Disneyland and Walt Disney World, where attendance has rebounded as the economy improves and terrorism fears ebb.

But with gas prices shooting above $2 a gallon and the situation in Iraq threatening to push them higher, why is Eisner so confident that families won't cancel plans to drive hundreds of miles to visit their favorite Disney theme park this summer? Those who live too far away to drive may also cancel their plans if rising jet fuel prices prompt more fare hikes.

That's the short term. Looking further out, there's worry that energy costs may undercut the economic recovery which helped bring the crowds back to Disney's resorts. Disney is also depending on 11 new TV series to lift its unprofitable ABC division from fourth place in the ratings. It's always an iffy proposition to rely on fickle TV viewers.

Add in the loss of a lucrative film partnership with Pixar Animation Studios (Nasdaq: PIXR), and it's hard not to wonder whether Eisner's confidence in forcasting three years into the future might not be driven by a desire to keep his job as CEO after being ousted as chairman in March.

Despite these wild cards, some analysts have gone out on a forecasting limb. Among the 28 Disney analysts surveyed by Thomson First Call, eight have published earnings projections for the company's fiscal year that ends in September 2006, and 11 have projected a long-term growth rate averaging 15 percent.

At AT&T, consumer revenues have plunged nearly 50 percent since 2000 amid price wars and competition from cell phones. The same pressures are sapping revenues from business services, though at a much slower rate.

While executives declined to detail their sudden optimism, part of the consumer turnaround is riding on AT&T's embrace of "Voice over Internet" technology as the telephone service of the future. But last week, a leading purveyor of the same service cut its price to $30 a month, or $10 less than AT&T charges -- a sure sign that this new market won't be immune to the same price wars that have hobbled AT&T's traditional business.

Perhaps most unclear about AT&T's prospects is the regulatory environment, where key decisions by government agencies and the courts may have a huge impact on the company's business.

Nonetheless, Thomson First Call reports that 13 of 25 analysts who cover AT&T have published a forecast for 2006, all of whom expect a profitable year.

It's easy to see why executives, especially those leading a troubled ship, might paint a positive long-term view. It's less certain why so many Wall Street analysts follow them out on that limb, where the only thing clearly visible is the debris from forecasts past.

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