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Politics : Formerly About Advanced Micro Devices
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To: Citidude who wrote (87964)1/18/2000 9:31:00 PM
From: Charles R   of 1574595
 
Citidude,

<1. Is this illegal or legal?>

Not that I know of. Not exactly a proper thing but that is a different story.

<2. If this is legal (and obviously the reporting company must report or footnote this in their financial's), to what account is this debited/credited to? Future earnings/cash (or AR)?>

Depending on whether they want the next quarter to look good or the current quarter, most companies push out shipments in the last couple of weeks of this quarter or pullin shipments from the first couple of weeks of next quarter to "make" the number. So, I guess one could say that these are coming from (or being added to) future earnings. There are lots of other games that can be played but this is by far the most common one.

<I remember Citicorp long ago taking a voluntary $1 billion write-off hit for 3rd world loans.>

This is somewhat different from what we are talking about. This is writing off bad business in fell swoop instead of letting it bleed on the earnings statements for several quarters. These one time charges are very valid exercise at times but of late they have become a very useful tool for CFOs to cook the books. If you are interested in some very useful discussion on this topic I suggest "The Essays of Warren Buffett" - a compilation of Buffettisms.

<Thanks in advance.>

You are welcome.

Chuck
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