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Microcap & Penny Stocks : Zia Sun(zsun) -- Ignore unavailable to you. Want to Upgrade?

To: StockDung who wrote (8919)	7/21/2000 12:40:30 PM
From: Sir Auric Goldfinger	Read Replies (3) \| Respond to of 10354

This totally agrees with what Frisky the Forensic Acct. says: "Modis Discovers a Way to Keep Its Owners in the Dark ANALYZING financial reports can resemble detective work. Sometimes a certain fact is crucial; sometimes it is irrelevant. One such fact is the trend in accounts receivable, the measure of how much customers owe but have not yet paid. A surge may indicate that the company is having disputes with its customers over how much they owe, or that customers are having problems paying their bills. Or, it may reflect a more liberal credit policy that is bolstering sales and profits. Either way, it is something that American investors are used to being able to analyze. But what does it mean if a company leaps through accounting hoops and comes up with a way to avoid disclosing what is happening to accounts receivable, as well as other facts normally disclosed on a routine basis? That is the question confronting investors in Modis Professional Services, a company that used to be a hot stock when it was called Accustaff. Modis was created in the early 1990's as a "roll-up," a company that merged dozens of temporary-help firms to create a national operation. Investors believed then that such combines somehow created synergies that made the whole more valuable than the sum of its parts. Now, roll-ups are out of fashion, and Modis's stock price is down 78 percent from its 1998 high. Modis is trying to get with the current fashion. It has sold some operations and plans to cut what is left into two pieces. The largest segment, the information technology division, provides about two-thirds of Modis's revenues. But Modis says that is the business being spun off to shareholders. So it treats it as a discontinued operation, and its latest quarterly report gives no details about its balance sheet. That is, to put it mildly, ridiculous. Not only is the division by far the largest part of Modis, but it is not being discontinued so far as the shareholders are concerned. They will continue to own it when the spin-off is completed. Modis's lack of disclosure does, however, comply with the minimum requirements of the current accounting rules. The Financial Accounting Standards Board last week proposed a new rule that would require complete disclosures in such cases, but that rule will not take effect for some time. Still, even though the current rule allows such treatment, nothing in it keeps Modis from telling its shareholders what is happening to the balance sheet of its largest operation. It just chooses not to do so. Modis is run by accountants. Its chief executive, Derek E. Dewan, and its chief financial officer, Michael D. Abney, are both former managing partners of the Jacksonville, Fla., office of Coopers & Lybrand. I wondered whether they thought that it was fair to investors to conceal such information. But the company's general counsel, after being told what I wanted to ask them about, called back to say they felt it would be improper to discuss such subjects while the spin-off was being planned. So we return to the question. What does it mean? I don't know. The fact that revenues at the information technology division fell 14 percent in the first quarter -- Modis did disclose that -- is not good news. But the fact that Mr. Dewan bought stock at $10.25 a share in April, or 25 percent more than the current price of $8.1875, is encouraging. It is an interesting mystery. But that is just the point. It should not be a mystery at all. Before executives with access to such routine information make more trades, they should let the other shareholders in on the facts.