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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: techreports who wrote (48799)	11/12/2001 9:29:44 AM
From: JHP	Read Replies (1) \| Respond to of 54805

jesus christ!you certainly know how to stop thinking. >>what does pro forma results have to do with this board and the book? it effects all stocks and isn't anything particular to the technology sector.<< What do pro forma earnings have to do with tech stocks? ROFLMAO this statment shows you do not even read or understand financials! why am i not surprised. prosperous investing LOL john

To: techreports who wrote (48799)	11/12/2001 9:56:37 AM
From: hueyone	Read Replies (4) \| Respond to of 54805

what does pro forma results have to do with this board and the book? it effects all stocks and isn't anything particular to the technology sector. There are two issues here. One, is that JHP is a _________( fill in your favorite derogatory word). The other, as that article pointed out (as has many other articles pointed out), the tech sector, including Gorillas, has been particularly egregious in its use of engineered pro forma accounting. Cisco was terrible in this regard and I suspect continues to be so. Tech companies, in particular, conveniently have stripped out everything from inventory write-downs to severance costs from their bottom-line figures and pressured analysts to do the same with their earnings estimates. A relevance to the book is that the supposed great earnings performance of some of these Gorillas, Cisco in 1999 and 2000 for example, simply was not there. Investors greatly overestimated the earnings performance of many of these companies (both backwards and forwards) and Geoffrey Moore had it backwards when he said investors tend to underestimate the earnings performance of these companies. Geoff's contention may have been true in the early years of CSCO, INTC and MSFT, but not in the late 1990s. The relevance of this going forward, is that if investors decide not to accept pro forma shenanigans and decide to price companies to reasonable economic value, then many of these companies will fall again. It is a risk that needs to be acknowledged. Warren Buffet suggests that in the very long run, companies at one time or another will reflect their true economic value. Personally, I am willing to bet a little money on the theory that people will continue to pay some premium to economic value for leading tech companies, but deciding what is a reasonable premium (as well as figuring out what premium one is paying) is tricky indeed. However, acknowledging a problem with pro forma accounting can at least get a person started on the road to trying to figure out what premium he or she is paying. Best, Huey