Philip Morris - A Stock For Wealth Or Poverty (MO) Message Board

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Non-Tech : Philip Morris - A Stock For Wealth Or Poverty (MO)

MO 58.60

+0.9%

Dec 22 3:59 PM EST

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To: md1derful who wrote (6106)	1/31/2001 7:12:48 PM
From: Xianming Liu	Read Replies (2) of 6439

Doc: The press seems to make a big deal on MO's $0.87 per share last Q vs the expected number $0.88. The $0.01 per share short for is due to the conservative nature of MO's accounting. Because of acquisition of Nabisco, MO incurred about $50 million interest expense. However, as the press release indicated, MO counted neither revenue nor profit from Nabisco. It would have made the estimated number if it either took the interest expense out or put the 2 week profit and revenue from Nabisco in. Due to amortization of goodwills, the real earning (i.e. free cash flow or cash earning) of MO (and RJR in particular) is significantly higher than the reported E.P.S. If one excludes the amortization of goodwill (as INTEL does), the real (cash) earning of MO in 2001 will probably be near $4.30 per share, instead of the $4.09. By the way, RJR has much heavier dose of goodwill amortization than MO. Excluding it, RJR's earning will probably be $7 to $8 a share, which is why RJR appears to have a higher P/E than MO.

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