chic-- The motives and strengths of analyses the average analyst are rather intruiging. The reason it is legitimate to criticize the accounting tricks used by certain corporations and proclaim them deceitful is that these practices cannot be carried on forever. If a company could sustain Intel's capital gains growth rate, could keep merging for exponential growth, etc. for decades, there would be no basis for criticizing the balance sheets. If an analyst believes that chicaneries are taking place and accepts that the earnings games are not long-term sustainable, and does not report this observation, he or she is doing something at least immoral, and, more importantly, borderline criminal. I do not believe that there are many (if any) criminal analysts.
The world is full of ambiguity. There are many people on the RAMBus thread who believe RDRAM is a wonderful technology and that it will rule the world. These folks also do not seem to be bothered by the fact that even if RAMBus takes a 1% cut of the whole DRAM market it is not worth much more than the present market cap. Not all of these people are idiots.
It was reductionistic of me to declare the analyst's lazy. However, I believe Dan Niles has gone into more than one conference call without having even skimmed the earnings report, let alone past 10-qs. Perhaps he leaves this to the junior analysts? Anyway, there are many people like Cramer who are very positive on the overall market, have unassailable intellectual and eduational qualifications, and are very genuine in their belief in the arguments they posit. Maybe instead of lazy I should say, "not considering the balance sheet as particularly important relative to trusting management to keep delivering."
-Eric |
