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Technology Stocks : Network Associates (NET)

NET 213.39

-5.5%

3:59 PM EST

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To: Chuzzlewit who wrote (4504)	3/26/1999 1:09:00 AM
From: Chuzzlewit	Read Replies (2) of 6021

This part of the article is frightening me: Larson said then [Jan 6, 1999]that Network Associates could offset any reduction caused by a restatement with cost cutting and that the company remained comfortable with 1999 earnings estimates. Question to the thread: does this make sense to anyone? If SEC-mandated restatements are effectively nothing more than a change in accounting principles (which I believe to be the case), why does Larson want to reduce costs to offset this artificial change? Put another way, the reduction in reported earnings has no bearing on real economic profit. So why would a rational CEO attempt to cut costs as a response? If these costs would not have been cut without the restatement, why cut them now? I smell a lot of financial engineering here. I would just love to look under the hood to see what's really going on. TTFN, CTC

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