Intel Corporation (INTC) Message Board

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Technology Stocks : Intel Corporation (INTC)

INTC 39.38

-3.4%

11:14 AM EST

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To: SisterMaryElephant who wrote (90244)	10/13/1999 11:21:00 PM
From: John O'Neill	Read Replies (2) of 186894

>>Also explain what you mean by "future profits"?<< with this accounting method...which will eventually be stopped...the sec has been addressing stopping this for years...they have once again delayed the decision till next year... the cost of an acquisition is never recognized...but the revenue is instantly recognized...assuming the acquisition is accretive to earnings, the profit from the acquisition will be included in future EPS.... CSCO is famous for managing earnings in this way....Yahoo gave a great example of this in their recent ".14"earnings (.05 after costs) a company need only to continue acquiring other companies and it looks like the eps is doing great....they never deduct the cost (except for taxes of course..two sets of books ya know). just think if you could do that...buy an apartment building...never have the cost go against your eps..but immediatly start reporting the revenue and the profit from your new apartment building (note the profit might be far less than the cost justified, but that wouldn't make any difference for the numbers..cause you never count the cost).....you could continually make eps/revenue look great ....just keep buying apt buildings...even if they are bad investments (cost is way too high for resultant earnings)..it wouldn't ever be reflected in the hyped EPS respectively..Shorty O'Neill

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