Robert O:
Intel does not present Pro Forma because it shows more information, it does it to enhance earnings by removing expenses that are truly ongoing. Calling something that happens 12 times a year, a one time expense, is nothing less than misleading the public. For something to be truly be called a one time expense it should happen less than once a year. And if Intel excludes expenses from acquisitions they should exclude revenues. Last I looked, Intel's (required because each company's Pro Forma definition is different from all others even its own over time for some) Pro Forma earnings numbers included all sources of revenue and the only thing removed is expenses.
And then the constant use of the Pro Forma numbers from Intel against the GAAP numbers from AMD as proof that Intel does better is the height of hypocrisy since it uses unequal bases and the one from Intel does not stay constant from one quarter to the next. Besides if Intel truly wanted to display more information about operations, they can simply provide a more detailed list of revenues, expenses and divisons. The best way is to break down the large pigeon hole known as "Other" into the 4 or 5 other major divisions.
GAAP is not perfect! I think that GAAP can be improved to more closely show the actual revenues, expenses and true profits of a company's operations. You just do not like it because it is rigid and shows that Intel is not doing as well as you like.
As to to government PROSECUTING, the government PROSECUTES misleading advertising. A statement from a company that their product "extends life by years and solves the problem" when tests show little improvement, a day at most and solves only one problem, their needed revenue. Youy think that the company can go on doing this with no consequences. Earnings statements are advertising (see how good we are doing). The government does not need to throw them into jail and throw away the key, they could simply require them to desist, place a warning that "Pro Forma earnings should not be compared to ..." or alter the way it can be presented to make it no longer misleading. It is evident that self regulation led to abuse, so a more formal regulation is needed.
One way to make it less misleading is to show the regular GAAP statement and then show separate lines for each change in two separate headings less revenues and less expenses and an explaination of why and from where each line was added (every line must be explained and sourced). It still could be abused, but it would be less misleading. It would be like someone telling you that this power company charges by KVAH saying this is a better way than by KWH. And assuming that the "Public" knows why that is. You would have to be an insider to what the difference is. You expect them to know it because you know it (a common assumption that gets many into trouble).
Pete |
