Non-GAAP earnings were $14.2B that year so with a 30% effective rate, pre-tax income would have been around $20.3B. An extra 8% tax on such income is $1.62B which is 23 cents a share on the 7.05B average diluted shares outstanding in 2009.
I don't even look at GAAP earnings and neither does 90% of those on Wall Street.
For one thing, just look at the differentials in tax rates. 29% in 2005 and 11% in 2007 when there weren't even any acquisitions those years?
I'll let you go crazy trying to make sense out of the nonsensical GAAP stuff. I want to know how the company is really doing on an operating basis and I need consistency for that.
It's why I insist on non-GAAP accounting and why most on Wall Street do as well.
When I was talking about the effect of the big tax hike on Pfizer's earnings, I was naturally talking about non-GAAP earnings. Because that's the only kind of earnings that matter.
by the way, do you know that MRK is only earning a few dimes a share using GAAP earnings these days? Do you really think it's selling for 100 times earnings or some such?
It's a real shame that GAAP stands for "Generally Accepted Accounting Principles" but the fact is that hardly anyone on Wall Street will accept those principals because earnings are distorted by too much.
Investors trying to do serious analysis want to see an earnings progression such as $2.03, $2.23, $2.24, $2.30, etc. for tax rate, they want to see 21% to 23% for each year 2004-2008 and then about 30% in 2009.