GM,
Re: discussion of the NY Times article...
Jump in Write-Offs an Ominous Sign for Investors, Paper Says
New York, June 7 (Bloomberg) -- Corporate write-offs as a percentage of reported earnings per share surged to 14 percent in the first quarter of 1998, the highest level ever, the New York Times said in its ''Market Watch'' column, citing Gabrielle Napolitano, vice president for investment research at Goldman, Sachs & Co. The rise is unusual, given the growing U.S. economy, and may indicate that companies are increasingly using an arcane accounting rule to artificially boost their reported earnings. The Times singled out Applied Materials Inc., the No. 1 semiconductor-equipment manufacturer, for writing off a $32.2 million licensing agreement instead of treating the fee as an operating expense -- an accounting technique that improved the company's operating cash flow by 26 percent.
Earnings for companies in the Standard & Poor's 500 Index, a benchmark
for the U.S. stock market, gained just 1.5 percent in the first quarter from the year before, according to IBES International Inc., the slowest pace of growth since the fourth quarter of 1991.
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