Abelson's sums up the quality of Yahoo's lack ofearnings this week.
What really got us mumbling on this was Yahoo's release of its quarterly earnings last week, which, the company's bullish claque proclaimed, had beat the estimates. After perusing the release and mulling the plasticity of the pro-forma contrivance, we were equally puzzled by (a) how anyone could make an earnings estimate in the first place; and (b) how any financial officer of the most modest competence could fail to beat it.
Pro forma, Yahoo reported second-quarter earnings of 11 cents a share, compared with a penny a share in the year-earlier period. However, when you add in the merger costs and amortization of goodwill of this very busy acquirer, earnings disappear, replaced by a loss of seven cents a share, down from eight cents a share.
Actually, the red ink flowed more abundantly than those figures suggest. For while it suffered a net loss of $15 million versus $14 million, the company in its June quarter this year benefited from a $3 million tax credit; by contrast, its 1998 June quarter was burdened by a tax charge of roughly that amount. Put another way, before taxes, Yahoo lost $18 million this year versus $11 million last year.
Which neatly illustrates why Yahoo and its fans -- and so many of its Internet kith and kin -- cherish pro forma. For in earnings, like virtually everything else about these companies, illusion, not the real thing, is what counts. |
