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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 659.00+1.0%Nov 21 4:00 PM EST
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To: Lee Lichterman III who wrote (35261)12/16/1999 12:13:00 AM
From: Dwight E. Karlsen  Read Replies (1) of 99985
 
I know that restatement of earnings for prior quarters is usually hard for investors to swallow, but in this case, I can actually see why investors don't seem real concerned:

1) The adjustments are supposedly only related to acquisitions. I may be mistaken, but to me that means those "one time charges" that appear every quarter. Therefore, earnings before one time charges would not be restated. And since investors have always discarded the one time charges as irrelevant, then prior period adjustments of one time charges would be disregarded, also.

2) Cisco has probably the best reputation of all tech companies for being straight shooters with analysts wrt what's happening in their company fundamentally. I think the average analyst probably believes that Cisco would *never* allow any material errors to go undetected quarter after quarter.

3) The blurb I saw had Cisco saying (in their 10-Q filing) that the restatements were the result of the SEC essentially applying rules in ways that are more rigorous than Cisco accountants deemed regular and acceptable.

4) If the Cisco auditors resign tomorrow, then obviously that changes things. A whole lotta things. -g-

I personally view the predictions of earnings not increasing as much as they have in recent quarters as a bigger negative than the stuff about the SEC rules on acquisitions. Considering Cisco's valuation using old-era metrics, I would expect Cisco to underperform the market for the next few months.
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