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To: puzzlecraft who wrote (121885)	7/21/2002 2:47:27 PM
From: Wyätt Gwyön	Respond to of 152472

well, to begin with, keep in mind that GAAP earnings are at least AUDITED, whereas pro forma earnings are rarely audited. moreoever, cos can exclude whatever they feel like in pro forma. the point regarding M&A is moot, because M&A has fallen off a cliff--not because of purchase vs pooling accounting, but because the tech market has fallen off a cliff. that is a total red herring, imo. the real problems with pro forma is the options accounting, and the ability to exclude all and sundry expenses in an unaudited format. e.g., many cos exclude layoff costs and inventory writedowns, even though these are a natural part of doing business and not extraordinary. there is no reason to give the fox the keys to the henhouse, imo. some cos used to include investment gains in their pro forma earnings, even as they excluded losses. so what is that--heads i win, tails you lose? another joke was the way some cos included options-related cash-flows into their pro forma results. i think ultimately he wrote that article because he has spent 20 years operating in one type of environment, and he doesn't know how to adapt to the new environment or what the new rules (which are really the old rules, the perennial rules) are. he is frustrated and confused (just like many tech investors). i will try elaborate on that later when i have time.