Which is worse?
a) A company intentionally hiding expenses and gets caught or
b) A company that actually accounted for the expenses but did so in wrong period...whether intentionally, unitentionally or unwittingly?
I am really beginning to think this thing is being blown way out of proportion by media because it makes such great headlines. Yeah while neither of the above are good, certainly category A is a far greater infraction than category B as intent in category A was not to account for at all.
Do some research on restatements, you will find numerous highly reputable Fortune 500 companies have been found guilty of the worse case scenario (category A) yet these matters ultimately get resolved and these companies recover from it and life goes on when this all becomes yesterday's news.
So why is a DMND Category B type infraction being viewed and portrayed as far worse than anything that has ever occurred before in stock market history that will result in the total destruction and death of this company that oh by the way still holds incredibly valuable products and brand names that are extremely attractive to other companies? One answer!!!!!.....short sighted media sensationalism (aka Herbism or Shortism).
The where one cockroach, smoking gun, another shoe to drop, conspiracy theory stuff overdone enough already. Give it a break.
This too will be resolved and this too shall pass. If your investment horizon is beyond the horizon of the CNBC Fast Money Traders of 1 day you will probably make some serious bucks on this in the weeks, months ahead from current price levels.
Yes, even Herb will ultimately flip flop on this one. What a racket!!!
Yes, Mendes and group knew in July that Q4 FY11 numbers were going to be bad. The stock price had been plumped up because of the Pringles potential. The market would have sold off hard if the correct financials were reported. This would have queered the Pringles deal. To avoid this Mendes cooked the books.
You can have the all the regulations you want including Sarbane Oxley. Crooks will be crooks.
Mendes has paid his price and will move on.
Same thoughts I've had all along.
Why is DMND the ultimate ~red-headed stepchild~ compared to
the multitudes of companies that have done far worse and just seem to shake it off?
Thanks for mirroring my sentiments on this issue.....
Financial engineering is used by many companies to smooth out earnings numbers. You can delay a cost. Revenues can be boosted by stuffing the channels. The number of shares repurchased can be controlled to hit an eps number. Many different ways. The reason for all this malarky lies with the analysts. These group of men and women essentially take a guess at what a companies performance should be. If the company misses, the stock is walloped. Nobody want the see downgrades. Especially when it can be avoided by massaging the data.
The case with DMND is different. Their movement of cost to a later year had the effect of boosting stock price in 2011. P&G saw this price and was happy to go through with the sale of Pringles. But ultimately the hit on 2012 earnings would have killed the stock price. But by then, the Pringles deal would have closed. The intent was to defraud, not to smooth out data. DMND got rightfully whacked. But the price has been paid and it is time to move on.
I have been saying this since Nov. 90% companies have done it and routinely do this... moving expenses in different quarters. Nothing happens.
Expenses are done on accrual basis and it is so easy to toll accrual for a few weeks in the last month of the quarter. For example, if suppose an outside contractor just finished a project... say on March 20.... a company can delay accruing some of the expenses by not giving the final approval to the project until April 1.
Criminal shorts bribed a few crook reporters and here we are. Everybody is a reporter these days... all you have to do is signup at Tumblr and start posting.