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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (1220)	2/9/1999 10:50:00 PM
From: porcupine --''''>	Respond to of 1722

New Rules Proposed for Better Accounting Oversight MARKET PLACE By MELODY PETERSON -- February 9, 1999 Reacting to a string of high-profile cases of accounting fraud and other abuses of financial reporting rules, a panel created by the leading stock exchanges and markets recommended a series of rules Monday that would strengthen the role of audit committees at public companies. Directors sitting on audit committees are expected to provide an independent check of companies' financial controls. But recent cases, in which companies like Cendant Corp. and Livent Inc. have announced that past financial statements included major errors, left many investors wondering why audit committee members had not discovered the problems earlier. The panel's recommendations include prohibiting audit committee members from having ties to the company or its executives that might harm the members' ability to make independent decisions or to question management's actions. For example, an audit committee member could not be an immediate relative of the company's top executives. The member also could not receive any compensation from the company other than for work done as a director. Another recommendation would require audit committee members to have enough knowledge of finance and accounting to be able to read and understand the company's financial statements. Officials at the New York Stock Exchange and at the National Association of Securities Dealers, which oversees the Nasdaq stock market and the American Stock Exchange, said Monday that they would review the proposals and determine whether public companies should be forced to follow the rules. Federal regulators may also change regulations to enforce the proposals. Most of the new rules would apply only to public companies with a market value of more than $200 million. In the next few months, public companies will be allowed to comment on the proposals. But Arthur Levitt, chairman of the Securities and Exchange Commission, called on public companies to adopt the proposals now. "This is a time for bold action," Levitt said at a news conference in Manhattan on Monday. "Qualified, committed, independent and tough-minded audit committees represent the most reliable guardians of the public interest." Last fall, Levitt had sought the creation of the panel. He said he was concerned about the growing number of companies announcing accounting problems. One of the most controversial recommendations may be a proposal that the company's outside auditors discuss with the audit committee whether the auditors believe that the company is bending accounting rules too far. Federal regulators have said recently that they are worried many companies use aggressive accounting techniques to help them meet the earnings levels expected by analysts. The aggressive accounting may be within the letter of the rules, the regulators have said, but it results in companies improperly reporting their financial results. Under the panel's proposal, the auditors and the audit committee would be required to discuss just how aggressive or conservative the company's accounting is. The panel also proposed that the audit committee include at least three members. The committee would also be required to write an annual letter to shareholders discussing whether or not it was comfortable with the company's accounting. While both the New York Stock Exchange and NASD require companies to have independent audit committees, the current rules are weak. And, in the last year, some companies that announced accounting problems had audit committee members with possible conflicts of interest. For example, questions were raised about financial ties between Walter A. Forbes, the former chairman of Cendant, and at least one member of the company's audit committee. Cendant said last year that it had discovered accounting irregularities that included more than $500 million of fictitious pretax income. And, at the Boston Scientific Corp., a member of the audit committee, N.J. Nicholas Jr., is the brother of Pete M. Nicholas, the company's chairman and chief executive. In November, the company said that its Japanese unit had improperly inflated revenue by tens of millions of dollars. The panel that announced the recommendations Monday included regulators, corporate executives, accountants, lawyers and other experts on corporate governance. Members included Ira M. Millstein, a partner at the New York law firm of Weil, Gotshal & Manges; John C. Whitehead, a former deputy secretary of state and retired partner at Goldman, Sachs & Co.; and Charles A. Bowsher, a former U.S. comptroller general. Copyright 1999 The New York Times Company

To: Freedom Fighter who wrote (1220)	2/9/1999 11:05:00 PM
From: porcupine --''''>	Respond to of 1722

Intel and Advanced Micro Cut Chip Prices By BLOOMBERG NEWS -- February 9, 1999 SANTA CLARA -- The Intel Corporation cut prices on its Celeron processors for low-cost personal computers by as much as 24 percent Monday, as it tries to crush competition from Advanced Micro Devices Inc. Intel, the No. 1 chip maker, reduced the price of its fastest Celeron, a 400-megahertz model, to $133 from $158. The price of the 366-megahertz Celeron was cut to $93 from $123. Advanced Micro in turn lowered the price of its most powerful chip, the 400-megahertz K6-2, by 15 percent, to $134 from $157. The cuts at both companies had been scheduled for later this month. Intel is intent on regaining market share lost to Advanced Micro for chips that power low-cost PC's. Intel is accelerating price cuts as well as its introduction of faster processors. Advanced Micro, which does not have the faster chips and sells its products for as much as 25 percent less than Intel, said last week it might post a first-quarter operating loss because of Intel's competition. Intel's 400-megahertz Celeron, introduced last month, was initially set to come out in the second quarter. New 433-megahertz and 466-megahertz Celerons may come to market in the first quarter rather than the second, analysts said.

To: Freedom Fighter who wrote (1220)	2/10/1999 7:25:00 PM
From: Freedom Fighter	Read Replies (2) \| Respond to of 1722

Sbarros a Good Deal!!, The Sbarro family recently agreed to up the offer for the shares it does not already own to $28.85. Shareholders accepted. (I think it's still light) Today, Sbarro's closed at 25 15/16. That is a 2.9125 point gap between the closing price and deal price. I spoke to the company several weeks ago and they said they expected the deal to close in around four months. I have not spoken to them since then and there's been no news that I am aware of. If the deal closes on schedule, an investor will receive approximately 11% (+/- depending on commissions and the number of shares purchased) over a 4 month period (perhaps even less). This works out to an excellent annualized rate of return for a deal that has an extremely high probability of closing. For those of you fearful of an imminent crash or the possibility of the deal falling thru, a June 25 Put can be purchased for 1 - 1 1/16. This strategy surrenders some return, but it STILL works out OK. Worst case if the deal falls thru and the stock collapses, you own it for about $24. Not such a bad downside considering the family loves it at 28.85 and I think they are stealing it at that price. A collapse of course is a very low probability event. Today, I upped my position with the PUTS. The net price I paid was 26 15/16 including the puts. I calculated the annualized rate of return at slightly north of 19% after commissions assuming a 4 month closing. I suspect it will be sooner and higher. Wayne Crimi - Value Investor Workshop members.aol.com