No. of Recommendations: 2
Rant ... You've heard of "pump and dump"?? ... Well, TYC for past month has been "dump and pump"! LOL!! TYC dropped from $60 at beginning of month, to low today @$27. (Closed $34.85.)

At 2:30 p.m. today, after Wall St. has been puking all over the TYC break up since announced, JP Morgan has cc, raises 9-mth price on TYC to $90. (BTW, Prudential, which has no investment banking division, only Wall St. firm with less than a "buy" on TYC; has "Hold").

Also this afternoon, S&P issues a statement clearing TYC of any accounting issues. Whoever heard of such a thing!

Ma and Pa get scared of their shorts 'cause people whisper ENE, dump TYC. Wall St. buys cheap and cleans up.

Being on this board has made me paranoid. LOL!

Been trading TYC, glad not to be an investor.
Print the post Back To Top
No. of Recommendations: 2
Being on this board has made me paranoid. LOL!

Only the paranoid will survive this mess.
Be prepared for at least 4 more years of it.


Print the post Back To Top
No. of Recommendations: 1
>>Being on this board has made me paranoid. LOL!

Been trading TYC, glad not to be an investor.<<

boad, You're not paranoid, you're realistic. I posted my take on the rat board when the TYC split was announced. Looks to me like the criticizm of their accounting (which has been going on for over a year) is on target and the honchos cooked up this scam as one last big double or nothing bet to cash out before their house of cards collapses.

Love this headline:

Wall Street defends Tyco to the last investor dollar
January 30, 2002 4:11:00 PM ET

Steve da realist
Print the post Back To Top
No. of Recommendations: 0
GE, Tyco, AOL Investors Sell When They `Can't Trust Numbers'
By Peter Robison
New York, Jan. 30 (Bloomberg) -- Investors are fleeing from companies that have any hint of flawed accounting after Enron Corp.'s collapse, causing shares of Tyco International Ltd., General Electric Co., AOL Time Warner Inc. and Cendant Corp. to plunge.

``You can't trust the numbers' of many companies, said Louis Navellier, manager of $5 billion at Navellier & Associates Inc. ``It's going to hurt the market's credibility.'

Investor confidence in financial reporting was rattled by the failure of energy trader Enron, the biggest bankruptcy ever, amid disclosures it used secret partnerships to conceal debt and boost profit.

Other revelations have made investors unwilling to own shares of some big U.S. companies, even amid signs the recession has ended. A Commerce Department report today said the gross domestic product rose at an annual 0.2 percent rate in the fourth quarter, and in the past week some companies have boosted earnings forecasts.

Williams Cos., an energy trader and a natural-gas company, yesterday stunned investors when it said it may have to absorb $2.4 billion in debt and costs from the ailing telecommunications company it spun off last year. The shares plunged as much as 21 percent today after falling 22 percent yesterday.

Tyco shares fell as much as 18 percent, adding to yesterday's 20 percent decline after the company disclosed that its paid a director $20 million. Some investors also fret that the company used writedowns related to some $64 billion in acquisitions to boost profit in following years.

Cendant, which owns the Avis rental car business and franchises Days Inn hotels, dropped as much as 19 percent after analysts at Credit Suisse First Boston and Lehman Brothers Holdings Inc. told clients the Wall Street Journal may be preparing an article critical of the company's accounting.

Even General Electric

Even General Electric, the company with the largest market value, has fallen about 8 percent in the past two days on concern its financial reports fail to show how the company makes money.

``There's a serious problem out there,' said Harvey Goldschmid, former general counsel of the Securities and Exchange Commission. ``The SEC ought to be rigorous in trying to make our numbers, which are the best in the world, even better.'

David Yucius, president of Aurora Investment Counsel in Atlanta, said he has shunned Tyco, General Electric as well as Cisco Systems Inc. because their accounting might mask slowing sales growth. Cisco relies on a so-called pro-forma profit measure that excludes some costs, while General Electric uses excess pension income and one-time gains from its financing unit to lift earnings, he said.

Using Levers

``I kind of grade companies based on how many of the levers they're using,' Yucius said. ``Cisco is using all the levers. GE is using a lot of the levers. And you have to watch acquisitive companies like Tyco.'

Tyco, General Electric and Cisco all said that they don't use accounting to manipulate earnings.

Recent history is one reason investors are so nervous. Enron's collapse erased $26 billion in market value in seven weeks, the culmination of a string of accounting mistakes by U.S. companies from Sunbeam Corp. to Waste Management Inc.

The number of public companies restating results rose to 156 in 2000 from 33 in 1990, according to Financial Executives International, a trade group of 15,000 executives based in Morristown, New Jersey. Between 1998 and 2000, investors lost $73 billion in market value because of stock plunges after restatements, compared with $9 billion from 1990 to 1997.

Complex Statements

Many of the battered companies are those with complex balance sheets that have made several large acquisitions, such as AOL Time Warner, which has dropped 10 percent in two days.

Other companies aren't being spared even when they make what may be honest mistakes.

Anadarko Petroleum Corp. shares fell as much as 7.8 percent today after the Houston-based oil and natural gas explorer said it will restate third-quarter earnings, adding a $1.08 billion writedown on the value of some properties because it used incorrect tax figures.

Investors said companies haven't helped their cases by popularizing pro forma profit measures, which depart from generally accepted accounting principles, or GAAP. The companies often pick and choose what to highlight, excluding costs such as inventory writedowns or investment losses.

'Junk' Numbers

Thomson Financial/First Call research chief Chuck Hill calls many of the measures that companies use to report earnings ``junk.'

``This has gotten out of hand,' said Hill, whose firm tracks analysts' earnings estimates.

AT&T Corp., for example, on July 23 issued a news release saying second-quarter earnings were 4 cents a share excluding certain items, while never providing a corresponding dollar amount. In the table attached to the release, AT&T showed a loss of $191 million, or 5 cents, from continuing operations.

Three weeks later, the biggest U.S. long-distance telephone company filed its quarterly SEC report. The loss based on GAAP: $2.27 billion.

AT&T spokeswoman Eileen Connolly said the loss included Liberty Media, a cable-television company run by John Malone that AT&T spun off Aug. 10. It wasn't mentioned in the release because AT&T had ``no economic interest' in Malone's company, she said.

Confused Reports

Ed Paik, an analyst with Liberty Funds Group, which owns 7 million AT&T shares, said he's still confused by AT&T's reports. ``There's nothing fraudulent, but it's very difficult to determine what they have and where they're going,' he said.

USA Networks Inc.'s fourth-quarter earnings release yesterday was just as opaque. The 37-page release reported ``cash net income' of 10 cents a share. In a series of tables, Barry Diller's media and Internet-commerce company said it had net losses ranging from $33 million to $57 million, depending on which costs were excluded.

USA spokesman Ron Sato said the company is simply trying to give investors more information.

Investors are starting to press regulators to rein in the most misleading accounting and reporting practices. They want companies to use more uniform standards and to file earnings under traditional accounting methods more quickly.

Others are calling on SEC Chairman Harvey Pitt to raise confidence in company audits. He's proposed setting up a private organization to discipline and police accountants. Julia Grant, an accounting professor at Case Western Reserve University, said Pitt should take more drastic action, including barring auditors from taking consulting fees from clients.

Navellier, the Nevada fund manager, said he's given up on most big companies.

``What you find is that they've actually manufactured some earnings through acquisitions,' he said, citing Compaq Computer Corp.'s 1998 purchase of Digital Equipment Corp. as an example.

Shortly after the purchase, the combined company had a $3.6 billion second-quarter loss on a writedown of acquired technology and other costs. By the fourth quarter, it rebounded to a record profit of $758 million, helped by tax credits after the purchase. Compaq's shares more than doubled to $49 by January 1999.

Within months, Compaq ousted Chief Executive Eckhard Pfeiffer as profit lagged and the company sunk to a $184 million loss in the second quarter of 1999.

Compaq's shares now trade at about $11. That history is one reason some investors oppose Hewlett-Packard Co. Chief Executive Carly Fiorina's plan to buy Compaq, Navellier said.

Navellier says he has one question for Fiorina: ``Are you doing this for accounting tricks?'

Print the post Back To Top