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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Mama Bear who wrote (12845)	8/15/1998 7:20:00 PM
From: Dave Twibell	Read Replies (1) \| Respond to of 18691

DAOU When I read the Barron's article I thought this stock looked like a no-brainer short, especially if we see some downgrades Monday. After I looked a little deeper, though, I wasn't quite so sure. It seems to me the issue of accounting for merger costs as one-time extraordinary expenses is somewhat of a red-herring if, as the company claims, the expenses are at least indirectly tied to the recent acqusitions and should therefore decrease substantially in the near future. Sure this is not good (as the drop on Friday shows), but it does not seem to be a long-term problem or signal a continuing move downward (although it certainly creates a big credibility problem for management). As far as the WIP accounting, the article makes it sound horrible, but my limited understanding is that many companies use WIP accounting and that it is generally accepted as proper in most cases. Moreover, the article never says that DAOU used WIP to fudge its sales, earnings, and receivables, only that the use of WIP would allow it the opportunity to do so. Finally, the lawsuit seems like much ado about nothing. It was filed almost a year ago and should be a known quantity at this point. I'm usually a lurker here, but thought some of you might have a little insight into whether DAOU is a promising short at this point. Thanks. Dave.