Your explanation was excellent. Let me throw my two cents in(US GAAP, of course, HAHAHA).
This issue is easily confusing, even to those of us who follow the company closely(and majored in accounting the first two years of college). Even the recent posts on this subject are intermixing terminology that is inconsistent and inaccurate. No offense intended to anyone, but it does help explain why some of us feel alittle confused(and mislead).
Firstly, the issue is not a question of reporting in Canadian or US dollars; that is a simple currency conversion. The headline number of $.55/share IS in US dollars, but it is a currency conversion of the Canadian earnings number, as per Canadian GAAP(Generally Accepted Accounting Principles). The $.44/share number is also in US dollars, but is based on US GAAP. The different accounting rules between the two countries matter only to accountants(have alot to do with amoritization, etc), but they can dramatically change the reported earnings.
On a year to year comparison, the official NT press release does deal fairly with growth in revs and, I think, earnings(the accelerated depreciation of the Bay purchase does muddle the water alittle here). The results are still outstanding, and I think the analysts are really focusing on the topline growth, not necessarily the earnings. They are also keying on the apparent comfort level NT mgmt has with the current guidance for Yr 2000.
But the bottom line to this discussion is that NT chose to highlight the headline number of $.55 without being upfront with the clarification of how this should(or should not) be compared to the Street estimates. This allowed most of the newswires(and Chat boards) to misread and misquote the magnitude of qtr's performance vs expectations.
If the analysts understand these fine nuances, and still upgrade and promote NT tomorrow, all the better. But, if after reviewing this issue they feel that NT was not as forthcoming as they should have been in their press releases, then there could be hell to pay.
I am not a doomsayer in general, or in this stock in particular. But I do believe that honesty is the best policy. The previous CFO's mishandling of a simple issue(was Bay's numbers in or out of a qtr's rev growth numbers) gave NT an unwarranted 50% haircut. I would hate to think that the new CFO(Dunn) could let such a material fact get misconstrued by the analysts OR the investing public.
I still believe overall that the results and forecasts for Yr2000 are sufficiently strong to generate a move up in NT tomorrow. We will see if our concerns about perceptions are warranted. We will also see tomorrow night what Monty has to say re BCE/NT. As I said before, Thursday may the the true pivotal day for NT.
Still holding long and large.
Paul |
