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Pastimes : LIST of COs. WITH HIGHLY QUESTIONABLE ACCTG. PRACTICES -- Ignore unavailable to you. Want to Upgrade?

To: John Lacelle who wrote (53)	8/6/2001 7:46:57 PM
From: WTMHouston	Respond to of 59

<<The question is why does pro forma accounting make Home Store a winner,and me a liar?>> I do not think it either makes them a winner or you a liar. Similarly, however, reporting pro forma earnings does not make them liars either -- at least not as long as they report the actual loss, which they have. Even though the "pro forma earnings" are substantially meaningless in my opinion, they are nonetheless truthful to the extent that they reflect what the company would have made had it not had expenses that cause them to have a loss. Of course, could of or would of seldom count for much. If there is some reason to believe that they are cooking revenue numbers, then I am very interested in hearing about it. However, if the only "lie" they have told is the pro forma earning reports, then it means much less as far as analysis for possible shorting since everyone already knows about the real losses -- which they did report. In this context, a comparison between true cash-flow (as opposed to accrued income from trade-out revenue) and the reported revenue numbers may be very useful and telling. Unfortunately, I do not know how easily, if at all, these are obtainable. Perhaps, however, there are a substantial quantity of investors who have bought into (or held onto) HOMS as a result of the "pro forma" earnings report; that is, despite the reported "actual" loss, it has been substantially ignored and investment decisions made on the basis of the pro forma earnings. If this is true (and I know of no reliable way to know this), then it would be a great short since reality will eventually set in and the price will come back to it when those folks head for the doors. The method of reporting is iffy, at best, but does not appear to be an out-and-out lie. It is sure enough to keep me from going long, but that standing alone is not near enough for me to short it. Troy