Have you noticed that GAAP seems to have gone out the window when many companies issue their earnings press releases? Yes, of course they follow GAAP when they do the official financials filed with the SEC. But more and more, companies excluding all sorts of real expenses from their "reported" earnings. Not just one-time stuff like restructuring charges, but ongoing things like stock option compensation charges, depreciation/amortization, or just about anything else management would rather deflect attention from.
This thread is dedicated to exposing the many tricks and schemes some companies are using to make their earnings look better than they really are.
It's gotten to the point that you can't tell whether many companies have met, beaten, or fallen short of analysts' estimates because you don't know which definition of "earnings" the analysts were projecting--see Post #2 below for an example.
The next thing you know, we'll see companies issuing pro forma earnings that exclude ALL executive compensation, on the grounds that the senior executives really aren't part of the day-to-day business.
Please post your examples of misleading approaches to earnings so that we can all beware of what to watch for. Discussion of these tactics is also welcome. |
