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Technology Stocks : All About Sun Microsystems
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To: uu who wrote (6723)1/14/1998 12:45:00 PM
From: LKO  Read Replies (1) of 64865
 
INTC just reported its earnings of 98 cents/shr with 8 cents
better than expected! Tomorrow will definitely be a very
very interesting day!

Beating the estimates is impressive, but in general comparisons
of EPS with historic ones should be cautious in the light of
change of FASB rules on calculation of EPS that went into affect
on Dec 15 1997. One assumes (hopes ?) analysts were honest
enough to adjust the estimates to these new rules but one
never knows.

I wonder if these EPS numbers we compare are "fully diluted" ones
or not. (Anybody know ?)

According to "Investors's Monthly" from Standards and Poor
(Jan 1998),

For the third quarter of 1997, in a typical example, GE
reported primary EPS of $0.60, while its basic EPS is $0.62

Here
Primary => OLD EPS computation method
Basic => NEW EPS computation method

It goes on to say.
For the same quarter, the primary to basic coversion states
higher EPS for .....Intel ($0.88 to $0.96) and
Microsoft ($0.50 to $0.55). S&P estimates that if the
primary to basic switch had been in effect for 1995, earnings
of the S&P 500 would have been almost 10% greater that year.

Essentially this new method allows the denominator to not include
"stock equivalents: options, rights, warrants and covertibles"
(whatever that means :-)).

There is another EPS which is refferred to as "Diluted" which
includes all these things excluded from the "other"
EPS( primary/basic).

Any finance gurus out there who might enlighten us ?
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