The SEC and FASB make it child's play using acquisitions to hide expenses. When you build an enterprise you have to declare expenses. Expenses are subtracted from revenue and the remainder (in simple terms) is called profit. But when you buy that enterprise the money you pay is allowed to be called an investment, not an expense. And so the "expense" does not get subtracted from revenues.
As a matter of fact it is accounted for as simply an exchange of he asset cash for the asset of the stock of the acquired business. The owners of the acquired company get money but it is characterized as a capital gain rather than as accelerated income on the income producing value of the enterprise they sold. So everyone wins but the idiots who buy the stock of the acquirer.
This big deal that ATHN just reported was in the bag before ATHN bought the company. Now they get to tell the story for Q1 and report the income even though they actually paid for that income in the acquisition but which they get to report as a capital transaction and not an expense.
I made a fortune 15 years ago shorting a company that did nothing but this. Each client hospital they signed up they paid the hospital for their system which was capitalized. Then they got to report the income without counting the cost as an expense. Each client they signed was like this and because they were reporting income with huge profits and because the idiots buying the stock did not bother to see that every deal took cash from the company and gave it to the client, that each deal left the company poorer, not richer, they were able to sell more and more stock until they had exhausted the available pool of fools. And this company had the AMEX symbol of MED. I went long for a month and then short. Made out both ways. ATHN is not a MED. ATHN is a legitimate business. MED was a promotion. The only issue about ATHN is that 99% of the investors have little or no idea what ATHN is or does or is worth. The only thing they think they know is the word CLOUD.
Cloud computing. Cloud commerce. The cloud. If its cloud it's good. Cloud good. No cloud, bad.