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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: AC Flyer who wrote (15169)2/18/2002 2:53:32 PM
From: mishedlo  Respond to of 74559
 
One thing that you don't hear from the nutball new depressionists is that the accelerated writedowns (which are noncash charges) taken for impaired goodwill under FASB 142 will result in much more favorable earnings comparisons going forward as past earnings were reduced and future earnings increase due to reductions in ongoing goodwill amortization.

This will hold true for how long?
1Q 2Q or more? How about 1 year max?
When they start having to compare GAAP to GAAP going forward, the next comparisons after this weak recovery will not look so good? If we sink back into recession, and I would think the odds of that are very very high after this bubble in which the consumer never stopped spending, what will those comparisons look like?

Already we have priced in one hell of a recovery, instead of the weak one we are going to get.

I also do not understand your comment about past earnings being restated. No many companies have done that, or are you assuming it will be automatic across the board. Even if that happens, what will PE's look like? They will still look like crap, will they not? Or are you suggesting PE's won't matter anymore once we get away from Pro-Forma earnings?

I can hear the analysts now "Don't worry about those high PEs cause those are REAL earnings now!. Give it time, the earnings expectations for 5 years out will give that company a forward PE of only 44 instead of the 288 that you see now."

M



To: AC Flyer who wrote (15169)2/18/2002 5:18:41 PM
From: Moominoid  Respond to of 74559
 
But that comparison isn't valid - i.e. past earnings with amortization and future without.... future earnings are going to be less smooth than in the past as occasionally big chunks of goodwill are wiped out.


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