I LOVE IT. Do a search on this thread only and use: pro forma, as the search criteria.
check out all of the posts in January that turn up on the search list.
Now compare that with say the piffer thread and 12 months ago.
It's a sea change. companies in the 1990's engaged in massive financial engineering to "keep up".
Message 16815710
....This is a real sea change in which the public and money managers are acquiring an increasingly skeptical perspective in the way stock investments are viewed. There was talk on cnbc yesterday of a video that FASB has released fasb.org Ben Stein interviews Warren Buffett, Abbey J Cohen, Floyd Norris of the NY Times on what quality earnings are and why they matter. Earnings have been vastly inflated by many companies the past several years due to the use of pro forma earnings and other accounting techniques. With pro forma earnings, expenses and costs that are incurred by the company are called "extraordinary" and one time. Thus they do not count when calculating earnings per share. Some of these one time charges are increasingly looking like ongoing costs of businesses. Today many companies engage in ongoing financial engineering, buying and selling assets, businesses etc.
Also if a company overpays for several companies which both ENE and CSCO did, and many others. And then writes off billions of dollars, the company can say those bad investments don't matter, but they do. This is a game that many, many companies have been playing during the 1990's with increasing zeal.
It seems that this is a trend where there is more and more recognition and concern about what companies are really worth. In the bigger picture over the next 2 or 3 years, we could see this trend increase and there will be more people looking at their diminished portfolios for companies that are still overvalued. Obviously this theory is not going to provide trading direction for the next few weeks. <?i>
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