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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: Mr. Pink who wrote (4949)	12/4/1998 2:18:00 PM
From: MoneyMade	Read Replies (1) \| Respond to of 18998

NOVL cooked books??? To: Victor Danti (24619 ) From: DavidD Friday, Dec 4 1998 1:34PM ET Reply # of 24620 I hate to be the bearer of bad news, but NOVL boosted it earnings sixfold using loose accounting rules. (Don't slay the messenger). The big question is, was this last quarter, last year, or what? =========================================================== cbs.marketwatch.com. Cooked books There is some good reading at the MoneyTalks Web site for investors who focus on those earnings reports. It seems corporate America continues to find creative new ways to dress up earnings reports and dupe investors. MoneyTalks' Matador column writer,John Tompkins, interviewed David Tice, manager of the Prudent Bear Fund (BEARX)who points out several companies have been called on their aggressive accounting techniques and, as a result, have had to restate previously rosy reports. Research and development costs and acquisition costs are two other ways companies can play with the numbers. Tice says 3Com (COMS) gave itself a 20-percent earnings boost by writing off acquisition costs. Novell (NOVL) did the same thing and boosted earnings six-fold. Restructuring costs are also popular. Kellogg (K) has taken nine "non-recurring" charges in 11 quarters. GM (GM) wrote down more assets through restructuring than it earned from operations in one five-year period. Lucent's (LU) $2.8 billion charge in 1996 was more than enough, says Tice, to smooth out bumpy earnings. Does anyone care? Tice claims few Wall Street analysts want to pan a stock for creative accounting. But the SEC is tiring of it. Chairman Arthur Levitt recently called today's financial reporting "a game of nods and winks." Bottom line? Tice says tougher accounting rules will mean more negative-earnings surprises. More on this recommendation is available at talks.com.