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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis -- Ignore unavailable to you. Want to Upgrade?

To: drakes353 who wrote (1202)	6/19/1998 3:51:00 AM
From: Q.	Read Replies (2) \| Respond to of 2506

drakes, Equimed did report profits for the first nine months of 1997. In fact, $1.89 eps, which is quite a lot for a stock trading at 7 ... the p/e is a mere 2.8 ... if you believe the eps. The reason I'm skeptical about the profits are two indicators of funny accounting: * Cash flow for 9 mos. from operations was negative. Very negative, at ($6.7 M) as compared to reported net income of +$8.6 M. * Receivables doubled to $37 M, despite declining revenues. The CEO has plenty of opportunities to play funny games with numbers, since there are lots of acquisitions and lots of transactions with companies he owns. So we have no way of knowing what the real eps of the co. is: maybe it is $1.89 as reported, but maybe it is -$1.89. Who knows. That's why I would like to see Ernst & Young's audited numbers. The last 10Q can be found at edgar-online.com