The first six sessions of June has produced no up days at all for the Dow, the S & P 500 or Pfizer. The best that any of them could do was yesterday's unchanged performance for Pfizer.
The accounting problems during the dot com bubble were now with GAAP, but pro forma, "adjusted", cooked book methods, exactly those which you so slavishly follow.
The fact is that the Street looks at all methods of computing earnings, & behind simplistic single EPS numbers which you so idiotically regard as hard science, to be "analyzed" only arithmetically.
That article was from early 2003 and just after the period when internet startups and such were really playing fast and loose with the numbers as they were losing money. So instead of showing true income, they would report EBITDA, etc.
Reform was needed to bring them into line but insistence on GAAP was going way too far. What is foremost in analysis is CONSISTENCY and there can't possibly be any consistency using GAAP - especially with acquisitive companies.
Nobody is interested either in truly one-time events such as wwhen Pfizer sold Consumer Products to JNJ and realized a huge one-time capital gain in the process.
Having earnings go from, say, $1.20 GAAP in 2005 to $2.60 GAAP in 2006 would show investors NOTHING of how operations were coming along without really having to delve into footnotes and such.
In a year like 2006 with those massive capital gains, GAAP earnings would have been in the stratosphere even if Lipitor sales had been just half of what they were.
So with such distortions and such FREQUENT distortions for acquisitive companies, that accounting method is rendered useless to serious investors wanting to analyze the company and see how recurring operations are really faring.
Nobody wants the annual numbers to have to entail a memory lesson - such as "oh yes - they acquired a big company in 2003 and they sold a division in 2006 and then they acquired another big company in 2009, etc. and have to go into past annual reports to delve into footnotes and such.
If I'm analyzing earnings from 2000 through 2011, I want to see a nice, steady, consistent string - not earnings that in some years are almost three bucks while in other years they are only a few quarters.
Any method resulting in the stats being all over the place should be thrown in the round file as they do you no good.
The estimates shown by Yahoo, the Nasdaq site and Barron's for Pfizer are all Thomson First Call estimates using NON-GAAP.
If Non-GAAP is used for Pfizer, they would use non-GAAP for just about everyone.
The only ones regularly using GAAP are S & P and as soon as they started doing that in 2002, I cancelled my long-standing subscription to their monthly Investment Guide.
For whatever reason, Value Line uses GAAP these days for Pfizer - but ONLY for Pfizer - and only since 2008. If you look at the Value Line reports, you see non-GAAP through 2007 and then GAAP thereafter.
If you look at Value Line's earnings for MRK for example, you see stats between $3 and $4 the last several years - and NOT just the few dimes GAAP that they are currently earning.
New rules from SEC take on goofy income
January 19, 2003|By Kathleen Pender
(Page 3 of 3)
Thomson First Call collects and disseminates analyst earnings estimates. The "consensus estimate" you read in the paper usually comes from Thomson First Call.
If some analysts following a company estimate GAAP earnings and other analysts estimate non-GAAP earnings (which is often the case) Thomson First Call disseminates whichever type the majority of analysts use.
As a result, the consensus estimate for one company may be GAAP earnings while the consensus for another company in the same industry may be non-GAAP.
Few would even want to find them. Does it make any difference to MRK if their GAAP earnings are 40 cents instead of 30 cents when the widely-followed non-GAAP earnings are expected to be $3.73 this year?
Obviously MRK is selling at a multiple of the $3.73 - a little less than ten times that number - instead of 90 or 100 times a meaningless GAAP stat.
If you really follow GAAP, you would have to believe that MRK is selling at about six times the multiple that AAPL is.
Thomson is the originator of First Call which is what Yahoo shows and what also is shown on the Nasdaq site that gives consensus estimates through 2014.
With reliable free sites, I wouldn't dream of paying to find out what useless GAAP estimates were.
I asked to be shown what the GAAP estimate for ABT for the year 2013 was. So far, nobody has shown it to me. Yes - I could find out if I wanted to pay - but few would do that.
You as always are a complete liar.
Anyone who wants to know analysts' GAAP estimates can find them. The Street uses its own analyses, however, not the worse than worthless, meaningless numbers you worship.
I've been shown no such sites - it's a complete lie. There are some places where I can get 2011 or 2012 GAAP estimates but there isn't a single site that would show me 2013 and 2014 GAAP estimates. That's because very few would care.
Accounting principles that penalize acquisitive companies are for the birds. If WYE stand-alone is able to report $4.8B in after-tax income for 2008, then on approximately the same revenues and without considering cost-cutting or the extra debt, Pfizer should certainly be able to show about that same dollar amount of earnings.
But outlandish GAAP regs require Pfizer to set up as assets "acquired intellectual properties" and then to amortize them when WYE itself never had to show the patents on its balance sheet.
An acquiring company should be fully entitled to show the same profits as the stand-alone company all other things being equal. But with GAAP, about a third of the profits is immediately siphoned off by the acquirer having to amortize patents that the target company never even had on its own balance sheet . And that absolutely isn't right.
The cost of the acquisition is already accounted for in the form of interest on the new borrowings, the lack of former interest on the old cash horde and dilution of the stock.
That accounts for the cost of purchase. But then to further penalize the acquirer by making them set up and amortize patents that the target company never had to show is just outrageous.
There would be no confusion if GAAP had a different acronym but because it stands for the self-important and grandiose "Generally Accepted Accounting Principles," non-accountants think that it's really authoritative and the only method to use.
After all, how can you question "Generally Accepted Accounting Principles?" But the truth is that it is so unfair and so inconsistent that few on Wall Street follow it - regardless of what it is called.
As for what it is called, the Democratic People's Republic of Korea (North Korea) is neither Democratic, the People have little say and it's not a true Republic. It is Korean, however. Also, the old Soviet newspaper Pravda meant "Truth" and yet there was little but lies in there.
CALLING something "generally accepted" doesn't mean that it really IS generally accepted - especially on Wall Street.
1) You have been shown many such sites.
2) What you get for free off Yahoo is not what analysts & other WS pros use, imbecile.
3) PFE's apparently low valuation based on pro forma numbers alone would convince a person of normal intelligence that the opinions of those who matter, ie fund managers & insti investors, don't go by pro forma, cooked book adjusted "earnings" alone.
This has all been explained to you endlessly for years. Why are you incapable of learning anything at all?
If you want earnings estimates, virtually all sites will show NON-GAAP estimates.
When I check the First Call numbers provided by Yahoo or check out the Nasdaq site for the 2013 and 2014 estimates, what I see is NON-GAAP.
The proof is in the pudding. Certainly if GAAP numbers were popular, I ought to be able to go to some websites and find out what consensus for, say, 2013 is.
Show me a site that will tell me what specifically the GAAP consensus estimate is for ABT for the year 2013.
I can show you the non-GAAP consensus estimate for that year. Can you show me the GAAP consensus estimate?