For starters...look at the options granted...we all know they should be an expense...but it's been ignored for years,, till NOW!
...listen to Warren...he tells it like it is.
edit
See here he's saying it again. I just found this after I posted the original note:
"Mr Buffett, 71, warned investors at the Omaha Civic Center in downtown Omaha to watch out for companies which used the fashionable profits calculation known as ebitda - earnings before tax, interest, depreciation and amortisation. "They are either conning you, or themselves," he said.
He also predicted that trading derivatives - a major business for collapsed energy trader Enron - would trip up other companies. "There's no place with as much potential for phoney numbers as derivatives," he said.
Charlie Munger, Berkshire's 78-year-old vice chairman, added: "To say derivative accounting in America is in the sewer is an insult to sewage." General Re, the re-insurer owned by Berkshire Hathaway, is unwinding its derivatives unit.
Enron came in for criticism. Mr Buffett called its behaviour "grotesque", and Mr Munger said: "Enron was the most disgusting example of a business culture gone wrong."
Corporate greed was attacked, especially the way stock options are treated in company accounts. "CEOs have their hands on the switch," Mr Buffett said. "They get what they want every year; consultants just fan the flames."
He is backing an attempt by Federal Reserve chairman Alan Greenspan to get regulators to force a change in stock option accounting, but is pessimistic that any changes will be made.
He wants options to be treated as an expense, like other forms of compensation. "It's shameful," he said, that options are being accounted for in a way that boosts profits and dilutes the value of a company's shares for investors.
Berkshire Hathaway's insurance units produced an underwriting profit of $20m (£14m) for the first quarter, reflecting premium growth of more than $1.8 billion."
money.telegraph.co.uk |
