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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: J Bertrand who wrote (9630)	2/20/1998 7:37:00 PM
From: Robert Graham	Read Replies (2) \| Respond to of 14631

Let me respectfully counter your enthusiasm. Remember when Bob F. went to great lengths to restate earnings and thereby increase the costs written against past revenue? This is a classic technique that IMO Bob took to unusual heights as a new CEO. This technique or variants of it is used to write off as much as possible in quarter(s) that are generally understood by the investor public to be losses anyway. This provides an opportunity for a CEO to throw everything he possibly can out as a cost, even costs that would normally be written toward future revenue. In this way I suspect he may have even accelerated the booking of costs. How else can IFMX go from the financial position it was in to show a profit in such a short time. Where did the income come from? How were the costs contained so quickly? Finally, if costs are aggressivley written off for previous quarters, then this book work can show a much greater profit (or much less loss) than would normally show up with normal book work which makes the CEO look very good and can even place extra bonus money in his pockets And when you have a CEO take over a company whose share holders in IFMX's case would not consider it too outrageous a story that earnings were misstated which warrants a restatement of past earnings, this is an opportunity that a new CEO on a turnaround company would dream about. Both the restatement of earnings was a positive to the shareholders, and what lead from this as the small profit reported for this quarter was also a positive. I am suggesting that the earnings increase for this last quarter was primarily the result of book work in a "one time" opportunity that this intelligent CEO took advantage of. Because of this observation of mine, I do not take last quarter's reported earnings too seriously. I suspect unless revenues substantially increase, we will see a drop in next quarters reported earnings. That is how aggressive I think Bob F was on the books. Bob Graham