Tom,
The lawsuits and downgrades are as sure as night follows day. If there was fraud, incompetence and ignorance, it was on the part of their former auditors. But I don't believe there was any of that, just an honest difference of opinion between auditors regarding SEC regulations that can and have been interpreted in various ways. The only error identified so far is the failure of one person at Price Waterhouse to adhere to the independence rule, who made $80 off the sale of 165 shares of Pediatrix stock in early 1997 . You can speculate that there is more to the story, and if there is, the stock may well hit single digits after the split. But if the whole story is what we've heard so far, and KPMG comes out in a week or two with their report which requires PDX to restate earnings by 10 cents a year or so, then I don't believe we'll see less than 20 pre-split.
You've cited some worse case scenarios in other issues of accounting irregularities (which this is not); I think LHSPF is a more comparable case, where earnings will have to be restated regarding a different handling of acquisition costs, and numerous lawsuits have been filed. Their stock went from highs similar to PDX, to lows similar to PDX - because people understood the company had a bright future. Actually the quality of PDX earnings and cash flow is substantially better than LHSPF.
You should also note that a number of investment firms have NOT lowered their rating on PDX. Are they dumb, or maybe just waiting to see what KPMG reports before throwing the baby out? How can you respect lawyers and investment brokers who jump all over this before there's sufficient information for anyone to make an informed decision? They, like you, are just momentum investing on the downside, ignoring the fundamentals of the situation. And I will continue to point out the fundamentals, and correct your inaccuracies when you post them.
Bob |
