Reply #67: Commentary: Companies obfuscate, analysts play along

[UpInArms]

http://www.marketwatch.com/news/story.asp?guid=%7BD388A1B6%2DC0E0%2D4C31%2DBDAA%2D9E45F945228E%7D&siteid=mktw

SAN FRANCISCO (MarketWatch) -- If it were a movie, the recent trend toward lower-quality corporate earnings reports might be called "Son of Pro Forma," or "Return of the Lies."

Whatever the title, it's a horror sequel that investors would rather not see.

Yet some prominent technology companies, aided by Wall Street analysts who once again seem to have misplaced their backbones, are trying to bring this feature back to a quarterly earnings statement near you.

A report last month from Merrill Lynch confirmed what many earnings watchers have suspected for some time.

The gap between net income computed using generally accepted accounting principles, known as GAAP earnings, and the earnings numbers relayed in company earnings statements, known by a variety of misleading euphemisms, is widening.

In fact, the GAAP gap, after improving for two consecutive years, is now close to 15%, worse than it was during the height of the stock market bubble.

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