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Strategies & Market Trends : Paint The Table -- Ignore unavailable to you. Want to Upgrade?

To: Jorj X Mckie who wrote (12056)	1/29/2002 11:24:56 PM
From: Lost1	Read Replies (2) \| Respond to of 23786

challo jeregy! is back...what does this mean?

To: Jorj X Mckie who wrote (12056)	1/30/2002 5:48:03 PM
From: John Pitera	Read Replies (1) \| Respond to of 23786

Jonathan Weil, had a very good article in today's WSJ. here's the first part of it. --------- Accounting Woes Roil Stock Markets As Nervous Investors Stampede Exits By E.S. BROWNING and JONATHAN WEIL Staff Reporters of THE WALL STREET JOURNAL It's not the economy anymore, stupid. It's the accounting. Tuesday was the day that the smoldering corporate accounting scandal, which started with Enron Corp. and quickly spread to Arthur Andersen LLP, reached a wide group of U.S. companies and seriously singed their stock prices. Accounting problems surfaced at companies ranging from banking to oil, prompting fears of new mini-Enrons and spurring a selloff of shares at the slightest whiff of such trouble. As a result, despite broadly upbeat economic news, the stock market took a tumble, with shares falling to their lowest levels in three months. Signs of toughening stances by auditors and regulators emerged, raising questions as to how many more corporate managements will be forced to restate their earnings and abandon cozy accounting treatments that easily passed muster a few months ago. Stocks in the banking industry, for instance, fell sharply following word that PNC Financial Services Corp., a Pittsburgh-based banking group, was restating its 2001 results. Analysts immediately fretted that many other banks could be hit. In addition, Williams Cos. delayed an earnings report to examine the impact of commitments to a former unit, and Tyco International Ltd. suffered on news that it had made a $20 million payment to an outside director and to a charity he controls. After the markets closed, Houston energy producer Anadarko Petroleum Corp. announced it made a billion-dollar mistake in the way it calculated the value of its domestic oil and gas properties for the quarter ended Sept. 30, citing faulty tax assumptions. A Watershed Development The upshot: Tyco was down almost 20% for the day, PNC fell more than 9%, and Williams fell more than 22%. On a day in which the big-picture economic news was good -- and other corporate earnings were, in fact, up -- the Dow Jones Industrial Average nevertheless fell 2.51%, or 247.51 points, to 9618.24, its lowest level since Oct. 29. Trading volume was the highest it has been since the week the markets reopened after the September terrorist attacks. Behind the frantic trading is a watershed development in American business: The fundamentals of the accounting profession have been called into question. Where two decades ago, accountants were still held in high esteem, now they rank in public opinion polls below politicians and even journalists. An opinion letter from a Big Five accounting firm, once viewed as a trusted seal of approval, now may not carry the imprimatur of authority. Some of the selloff could be an overreaction. The U.S. continues to have one of the world's most rigorous accounting systems, and most companies clearly function within the rules. But just as investors ultimately turned away from overhyped tech stocks during the Internet bust, in the wake of Enron they clearly have no stomach for any hint of accounting irregularities. "The market has little or no tolerance for any of the unknowns associated with ... accounting right now," said Matthew Johnson, head of U.S. stock trading at New York brokerage firm Lehman Brothers. "It is just bar-the-doors." Sense of Excess Amid a growing sense that bull-market excess made companies push accounting rules to the limit in the late 1990s, regulators have become more sensitive than ever -- raising the specter of a problem that could well grow. In the case of PNC, for instance, the bank said it planned to restate its numbers in the wake of an accounting probe by the Federal Reserve and the Securities and Exchange Commission. "What is underlying this whole thing is a huge discrepancy concerning what really constitutes earnings," said Henry Herrmann, chief investment officer at mutual-fund group Waddell & Reed in Overland Park, Kan. "The market is giving a big haircut to companies whose earnings numbers raise questions in investors' minds." Several of those companies said the attention is unfair. "Clearly we are in an environment where people are intensely skeptical of Corporate America," said Dennis Kozlowski, Tyco's chairman and chief executive, who said the payment to the director was "appropriate" and had been fully disclosed in Tyco's proxy statement. "Obviously, we believe the reaction in our stock price was unjustified."