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Subject: Re: AW: [CANSLIM] Arthur Andersen
Date: Sat, 19 Jan 2002 21:29:24 -0600
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jans,
The accounting changes have to do with the way goodwill is handled on =
the books. Companies will no longer be required to write it off over =
time, meaning EPS will be higher as a result. Most companies report =
pro-forma numbers anyway, essentially deleting the "one time" or =
"extraordinary" charges such as write down of goodwill. The problem with =
goodwill is that it is the excess paid over the "value" of a purchase, =
so companies will be required to write it down only if the "value =
changes." (Hah...now *there's* an entire inerpretive consulting practice =
right there!) When goodwill was originally conceived it was a way to =
show something of value that couldn't be calculated in book value, etc. =
For example, if I bought Coca-Cola, the value of its net assets might be =
$100, but I might pay $200 for it. The excess could be perceived as =
"brand value" which of course, can't really be quantified in a true =
accounting sense. Unfortunately, when companies overpay for acquisitions =
with inflated stock, things get really ugly. Good example would be a =
company like JDSU which purchased ETEK and SDLI at the height of the =
bubble.=20
Katherine
Here's an explanatory article:
Unreliable estimates =20
January 15, 2002: 2:39 p.m. ET
New accounting rule muddies projections, may lead to seemingly =
higher profits.=20
By Staff Writer Victoria Zunitch
=20
=20
=20
=20
=20
=20
NEW YORK (CNN/Money) - Earnings estimates, one of Wall Street's =
favorite prediction tools, may be unusually unreliable for at least the =
next few months as a new accounting rule could make some companies' =
profit growth appear higher than it actually is.
The new rule, Financial Accounting Standards Board (FASB) rule FAS =
142, applies to all public companies as of January 1. It says that =
goodwill, which companies book in some mergers and acquisitions, no =
longer must be automatically amortized, or written down, over a maximum =
of 40 years. Goodwill is the amount paid for a business that exceeds its =
book value.
Instead, companies will have to write down goodwill only if its =
value decreases. Although some companies will have to take these =
write-downs from time to time, which will reduce their earnings, =
analysts say that most companies will benefit from the change and =
overall earnings will be higher than in the past.
Some say the new rule could make aggregate earnings for the =
overall market appear as much as 5 to 10 percent higher.
=20
=20
Comparing apples with apples
Many analysts and companies still have not updated their 2002 =
projections to reflect the new rule. What makes the problem more =
serious, though, is that companies are not required to recalculate their =
earnings for previous years in advance and this could give investors a =
false impression of actual earnings growth through the years.
"Everybody is in a pretty reasonable state of confusion," said =
Charles Blood, director of financial markets and economic analysis at =
Brown Brothers Harriman.
Chuck Hill, director of research at earnings tracking firm First =
Call, thinks companies might wait for each new quarter of 2002 to report =
the correct comparison, or "pro forma," numbers for the corresponding =
2001 quarter.
But it is unclear if and when multiple-year comparisons will be =
provided.
"FASB does a very good job at putting out their opinions and how =
the accounting works, but not at the implementation," Hill said.
FASB director of research and technical activities Timothy Lucas =
said he believes that the Securities and Exchange Commission requires =
multiple-year comparisons in corporate annual reports and that will, by =
default, eventually take care of this problem. An SEC official, =
contacted twice, was unable to confirm this as of press time.
What is First Call doing?
In an effort to dispel some of the confusion, First Call is =
posting earnings estimates calculated under both methods and is urging =
users of its service to be cautious.
Hill is hoping that most first-quarter projections will be =
recalculated to account for the new rule by the end of this month.
Some industries have already taken the lead. The merger-intensive =
financial and technology sectors are ahead of the game and have begun =
providing their estimates based on the new rule. In fact, FASB used a =
good deal of information from the banking industry when working on the =
change.
"Most of the major banks have already been giving the data anyway, =
so comparability won't be a problem, because we already have the data," =
said Ron Mandle, analyst at Sanford Bernstein.
In other sectors of the market, analysts are still waiting for =
companies to provide details before they prepare their new estimates.
Saying that they'd rather get it right than fast, these analysts =
are relying on the companies they cover to provide them with guidance =
and do the arithmetic.
"I didn't want to go ahead and speculate only to have to adjust =
because I didn't get the classifications right," said Michael Harris, a =
Deutsche Banc analyst who follows Caterpillar (CAT: down $0.59 to =
$49.90, Research, Estimates).
Todd A. Hinrichs, who follows Caterpillar for ABN Amro and also is =
waiting for company guidance, says the issue isn't that much of a =
problem for his clients because they're institutional investors who =
understand the change.
But he and others concede that individual investors, in particular =
those who pick their own stocks using analysts' estimates, probably will =
be confused.
Coping with uncertainty
Even Wall Street's top strategists are guessing when they compare =
earnings expectations to previous years. Strategists use the coming =
year's projected earnings to make predictions and judgments about the =
market. They base some of their work on how much earnings have grown, or =
not grown, from previous years.
But without proper comparison numbers from past years, projecting =
future growth or even analyzing current growth will involve more =
guesswork than usual. Wall Street has been through this before with =
other accounting changes, so the professionals have established coping =
methods. For example, at Brown Brothers Harriman, Blood expects to =
prepare two sets of earnings projections because of the new rule.
But to a certain degree, the market is stuck with precisely what =
it hates most: uncertainty.
"What you have to accept is that we won't get very precise numbers =
until we have everything sorted out," says Subodh Kumar, chief =
investment strategist at CIBC World Markets=20
----- Original Message -----=20
From: Spencer48@aol.com=20
To: canslim@lists.xmission.com=20
Sent: Saturday, January 19, 2002 9:16 PM
Subject: Re: AW: [CANSLIM] Arthur Andersen
Dave, Andreas and Tom:
Andreas: How can cash-flow be below EPS, since in order to derive =
cash-flow you must add non-cash expenses (like amortization expense,=20
and-possibly (see next paragraph as to why I am uncertain)-good-will =
expense)
On Wednesday or Thursday's CNBC show with Lawerence Kudlow at =
11PM EST,=20
the show revolved around the Enron scandal. I thought I heard mention =
that=20
the Supervisory Board relating to Accounting Practices was doing away =
with=20
the balance sheet entry "Goodwill", but I thought it had already been =
done=20
away with several years ago? =20
In any event, what baffles me is that just about everyone on the=20
business news remarks on Enron's OFF BOOK ACCOUNTS, but I've heard no =
one on=20
any of these shows lambast anyone at Enron (or Anderson=20
who-putatively-audited them) who decided to go with off-book =
accounting. It=20
makes one wonder, how many public corporation have off-book entries? =
It also=20
makes one wonder if DGO, WON and IBD recognize these entries as =
legitimate-or=20
if they are even aware of them? I guess the bottom line is: How =
accurate is=20
an off-book entry, and does it accurately and legally reflect the=20
corporation's profit/loss statement, or is it instead a gambit a =
corporation=20
uses to circumvent investment law and SEC supervision?=20
jans=20
In a message dated 1/19/2002 8:02:27 PM Eastern Standard Time,=20
judgejimmy@web.de writes:
<< ts not only Anderson or Enron, its also laws that give the =
possibiltiy
to give EPS numbers that are so far away from the cash flow number, =
that
the EPS number does not represent "a true and fair view" of the =
current=20
situation
of the firm. You can not pay bills with EPS number, you only can pay
for personel and material if you generate enough cash flow to cover =
your=20
costs
and to reach a profit margin and to take care of investments in you =
business.
=20
A very good way to see quickly if the EPS Reporting is fair or not =
- -->
=20
Check if the Cash Flow is above or at least equal to the EPS numbers=20
reported.
If it is even below, than its always good to be really critical ...
=20
Cash Flow Price Ratio should be always below the PE Ratio. A good =
sign is
if the Cash Flow to Price Ratio is half the PE Ratio (thats my rule =
of=20
thumb).
=20
Even better, use free cash flow (the money that is not needed even =
after=20
investments charged),=20
but this is not provided by any service I know ...
=20
I always wondered, why the investment community does not pay =
attention to=20
the differences
between both numbers (PE and PCF Ratio).
But as far I can tell, a low Price Cash flow Ratio, which is well =
below the=20
PE Ratio is
very seldem taken into account by the market and very seldem is used =
as=20
"fuel" to
price up the stock price.
=20
So I only get really cautious if the PCF Ratio is not below the PE =
Ratio.
=20
But with Enron, I gues, even this would not have helped, due to the =
fact=20
that they just reported
wrong numbers...
=20
See you
=20
Andreas
=20
=20
> -----Ursprungliche Nachricht-----
> Von: Dave Cameron [SMTP:dfcameron@yahoo.com]
> Gesendet am: Sunday, January 20, 2002 1:07 AM
> An: canslim@lists.xmission.com
> Betreff: [CANSLIM] Arthur Andersen
>=20
>=20
> --- Tom Worley <stkguru@netside.net> wrote:
> Tom writes:
>=20
> > Is it coincidence that Arthur Andersen is Enron's consultant /
> > advisor / auditor, and was also doing some of the same for =
Sunbeam?
> > (some Sunbeam execs just settled a shareholder class action =
lawsuit
> > for $15 million so they can concentrate on defending themselves
> > against fraud charges by the SEC). Sure, I'll pay you guys $15
> > really big ones, but, hey, I'm still not admitting I did anything
> > wrong with the company financial reports. Maybe we should be =
buying
> > shares in companies making shredders?? This is the third big
> > financial scandal in recent years involving Andersen, and now
> > leading to cries from Congress for governmental regulation of
> > accounting firms. Great idea, let the politicians who rarely can
> > balance a budget, and invented the concept of off-book =
accounting,
> > regulate the accountants.
>=20
> This makes me wonder how "good" the earnings figures we get really
> are. It seems logical that given the number of firms that Arthur
> Andersen serves as the accountants/auditors, there have to be more
> out there that are fraudulent - and someone is benefiting.
>=20
> Furthermore, is it likely this behavior is unique to just Andersen?
>=20
> I don't mean to sound like a conspiracy type; but it does give me a
> dose of cynicism that we have to be even more diligent in our
> research. Enron was rarely, if ever, a CANSLIM stock, but the =
lesson
> is valuable nonetheless.
>=20
> I suspect the Enron situation could change some legislation. =
There
> are some big name trustee types demanding an investigation. I =
blame
> Andersen more than Enron. Andersen is "supposed" to be =
impartial;
> hence the auditing requirements.
> >>
-
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<DIV>jans,</DIV>
<DIV> </DIV>
<DIV>The accounting changes have to do with the way goodwill is handled =
on the=20
books. Companies will no longer be required to write it off over time, =
meaning=20
EPS will be higher as a result. Most companies report pro-forma numbers =
anyway,=20
essentially deleting the "one time" or "extraordinary" charges such as =
write=20
down of goodwill. The problem with goodwill is that it is the excess =
paid over=20
the "value" of a purchase, so companies will be required to write =
it down=20
only if the "value changes." (Hah...now *there's* an entire inerpretive=20
consulting practice right there!) When goodwill was originally conceived =
it was=20
a way to show something of value that couldn't be calculated in book =
value, etc.=20
For example, if I bought Coca-Cola, the value of its net assets might be =
$100,=20
but I might pay $200 for it. The excess could be perceived as "brand =
value"=20
which of course, can't really be quantified in a true accounting sense.=20
Unfortunately, when companies overpay for acquisitions with inflated =
stock,=20
things get really ugly. Good example would be a company like JDSU which=20
purchased ETEK and SDLI at the height of the bubble. </DIV>
<DIV> </DIV>
<DIV>Katherine</DIV>
<DIV> </DIV>
<DIV>Here's an explanatory article:</DIV>
<DIV> </DIV>
<DIV>
<TABLE cellSpacing=3D0 cellPadding=3D0 width=3D440 border=3D0>
<TBODY>
<TR>
<TD class=3Dstorysubheadline colSpan=3D2 height=3D50><FONT =
size=3D5>Unreliable=20
estimates</FONT> <!--startclickprintexclude--></TD></TR>
<TR>
<TD vAlign=3Dtop width=3D145 height=3D120><IMG height=3D105 =
alt=3Dgraphic=20
=
src=3D"http://money.cnn.com/2002/01/15/investing/uncertain_estimates/calc=
ulator_question.01.jpg"=20
width=3D140 border=3D0></TD>
<TD vAlign=3Dtop><!--endclickprintexclude--><SPAN =
class=3Dtimestamp>January=20
15, 2002: 2:39 p.m. ET<BR><BR></SPAN><SPAN class=3Dstorytease>New =
accounting=20
rule muddies projections, may lead to seemingly higher =
profits.</SPAN>=20
<SPAN class=3Dstorybyline><BR><!--Start Byline-->By <A=20
href=3D"mailto:Victoria.Zunitch@turner.com">Staff Writer Victoria=20
Zunitch</A><BR><!--End =
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colSpan=3D5><!--Start box elements--><!--End box =
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Body-->NEW=20
YORK (CNN/Money) - Earnings estimates, one of Wall Street's =
favorite=20
prediction tools, may be unusually unreliable for at least the =
next few=20
months as a new accounting rule could make some companies' profit =
growth=20
appear higher than it actually is.<BR><BR>The new rule, Financial=20
Accounting Standards Board (FASB) rule FAS 142, applies to all =
public=20
companies as of January 1. It says that goodwill, which companies =
book in=20
some mergers and acquisitions, no longer must be automatically =
amortized,=20
or written down, over a maximum of 40 years. Goodwill is the =
amount paid=20
for a business that exceeds its book value.<BR><BR>Instead, =
companies will=20
have to write down goodwill only if its value decreases. Although =
some=20
companies will have to take these write-downs from time to time, =
which=20
will reduce their earnings, analysts say that most companies will =
benefit=20
from the change and overall earnings will be higher than in the=20
past.<BR><BR>Some say the new rule could make aggregate earnings =
for the=20
overall market appear as much as 5 to 10 percent =
higher.<BR><BR><!--FN_BOX_BEGIN-->
<TABLE cellSpacing=3D0 cellPadding=3D0 align=3Dright border=3D0>
<TBODY>
<TR>
<TD width=3D10 rowSpan=3D3> </TD>
<TD align=3Dmiddle width=3D204><IMG height=3D209 alt=3Dgraphic =
=
src=3D"http://money.cnn.com/2002/01/15/investing/uncertain_estimates/earn=
ings_appear_taller.gif"=20
width=3D204 border=3D0> </TD></TR>
<TR>
<TD vAlign=3Dtop width=3D204></TD></TR>
<TR></TR></TBODY></TABLE><!--FN_BOX_END--><!--FN_BOX_BEGIN-->
<CENTER><B>Comparing apples with=20
apples</B></CENTER><BR><!--FN_BOX_END-->Many analysts and =
companies still=20
have not updated their 2002 projections to reflect the new rule. =
What=20
makes the problem more serious, though, is that companies are not =
required=20
to recalculate their earnings for previous years in advance and =
this could=20
give investors a false impression of actual earnings growth =
through the=20
years.<BR><BR>"Everybody is in a pretty reasonable state of =
confusion,"=20
said Charles Blood, director of financial markets and economic =
analysis at=20
Brown Brothers Harriman.<BR><BR>Chuck Hill, director of research =
at=20
earnings tracking firm First Call, thinks companies might wait for =
each=20
new quarter of 2002 to report the correct comparison, or "pro =
forma,"=20
numbers for the corresponding 2001 quarter.<BR><BR>But it is =
unclear=20
if and when multiple-year comparisons will be =
provided.<BR><BR>"FASB does=20
a very good job at putting out their opinions and how the =
accounting=20
works, but not at the implementation," Hill said.<BR><BR>FASB =
director of=20
research and technical activities Timothy Lucas said he believes =
that the=20
Securities and Exchange Commission requires multiple-year =
comparisons in=20
corporate annual reports and that will, by default, eventually =
take care=20
of this problem. An SEC official, contacted twice, was unable to =
confirm=20
this as of press time.<BR><BR><!--FN_BOX_BEGIN-->
<CENTER><B>What is First Call =
doing?</B></CENTER><BR><!--FN_BOX_END-->In=20
an effort to dispel some of the confusion, First Call is posting =
earnings=20
estimates calculated under both methods and is urging users of its =
service=20
to be cautious.<BR><BR>Hill is hoping that most first-quarter =
projections=20
will be recalculated to account for the new rule by the end of =
this=20
month.<BR><BR>Some industries have already taken the lead. The=20
merger-intensive financial and technology sectors are ahead of the =
game=20
and have begun providing their estimates based on the new rule. In =
fact,=20
FASB used a good deal of information from the banking industry =
when=20
working on the change.<BR><BR>"Most of the major banks have =
already been=20
giving the data anyway, so comparability won't be a problem, =
because we=20
already have the data," said Ron Mandle, analyst at Sanford=20
Bernstein.<BR><BR>In other sectors of the market, analysts are =
still=20
waiting for companies to provide details before they prepare their =
new=20
estimates.<BR><BR>Saying that they'd rather get it right than =
fast, these=20
analysts are relying on the companies they cover to provide them =
with=20
guidance and do the arithmetic.<BR><BR>"I didn't want to go ahead =
and=20
speculate only to have to adjust because I didn't get the =
classifications=20
right," said Michael Harris, a Deutsche Banc analyst who follows =
<A=20
=
href=3D"http://cgi.cnnfn.com/mgi/mgi_search?QUERY=3DCAT">Caterpillar</A> =
<!--FN_BOX_BEGIN-->(<A=20
href=3D"http://gw.money.cnn.com/search/GW?symbol=3DCAT">CAT</A>: =
down $0.59 to=20
$49.90, <A=20
=
href=3D"http://cnnfn.multexinvestor.com/TickerSearch.asp?ticker=3DCAT">Re=
search</A>,=20
<A =
href=3D"http://cgi.money.cnn.com/firstcall/fc?ticker=3DCAT">Estimates</A>=
)<!--FN_BOX_END-->.<BR><BR>Todd=20
A. Hinrichs, who follows Caterpillar for ABN Amro and also is =
waiting for=20
company guidance, says the issue isn't that much of a problem for =
his=20
clients because they're institutional investors who understand the =
change.<BR><BR>But he and others concede that individual =
investors, in=20
particular those who pick their own stocks using analysts' =
estimates,=20
probably will be confused.<BR><BR><!--FN_BOX_BEGIN-->
<CENTER><B>Coping with =
uncertainty</B></CENTER><BR><!--FN_BOX_END-->Even=20
Wall Street's top strategists are guessing when they compare =
earnings=20
expectations to previous years. Strategists use the coming year's=20
projected earnings to make predictions and judgments about the =
market.=20
They base some of their work on how much earnings have grown, or =
not=20
grown, from previous years.<BR><BR>But without proper comparison =
numbers=20
from past years, projecting future growth or even analyzing =
current growth=20
will involve more guesswork than usual. Wall Street has been =
through this=20
before with other accounting changes, so the professionals have=20
established coping methods. For example, at Brown Brothers =
Harriman, Blood=20
expects to prepare two sets of earnings projections because of the =
new=20
rule.<BR><BR>But to a certain degree, the market is stuck with =
precisely=20
what it hates most: uncertainty.<BR><BR>"What you have to accept =
is that=20
we won't get very precise numbers until we have everything sorted =
out,"=20
says Subodh Kumar, chief investment strategist at CIBC World=20
Markets</TD></TR></TBODY></TABLE></DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3DSpencer48@aol.com=20
href=3D"mailto:Spencer48@aol.com">Spencer48@aol.com</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Saturday, January 19, =
2002 9:16=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: AW: [CANSLIM] =
Arthur=20
Andersen</DIV>
<DIV><BR></DIV>Dave, Andreas and Tom:<BR><BR> =
Andreas:=20
How can cash-flow be below EPS, since in order to derive <BR>cash-flow =
you=20
must add non-cash expenses (like amortization expense, =
<BR>and-possibly (see=20
next paragraph as to why I am uncertain)-good-will=20
expense)<BR><BR> On Wednesday or Thursday's =
CNBC show=20
with Lawerence Kudlow at 11PM EST, <BR>the show revolved around the =
Enron=20
scandal. I thought I heard mention that <BR>the Supervisory =
Board=20
relating to Accounting Practices was doing away with <BR>the balance =
sheet=20
entry "Goodwill", but I thought it had already been done <BR>away with =
several=20
years ago? <BR><BR> In any event, what =
baffles=20
me is that just about everyone on the <BR>business news remarks on =
Enron's OFF=20
BOOK ACCOUNTS, but I've heard no one on <BR>any of these shows lambast =
anyone=20
at Enron (or Anderson <BR>who-putatively-audited them) who decided to =
go with=20
off-book accounting. It <BR>makes one wonder, how many public=20
corporation have off-book entries? It also <BR>makes one wonder =
if DGO,=20
WON and IBD recognize these entries as legitimate-or <BR>if they are =
even=20
aware of them? I guess the bottom line is: How accurate is =
<BR>an=20
off-book entry, and does it accurately and legally reflect the=20
<BR>corporation's profit/loss statement, or is it instead a gambit a=20
corporation <BR>uses to circumvent investment law and SEC supervision? =
<BR><BR>jans <BR><BR><BR>In a message dated 1/19/2002 8:02:27 PM =
Eastern=20
Standard Time, <BR><A =
href=3D"mailto:judgejimmy@web.de">judgejimmy@web.de</A>=20
writes:<BR><BR><< ts not only Anderson or Enron, its also laws =
that give=20
the possibiltiy<BR> to give EPS numbers that are so far away from =
the=20
cash flow number, that<BR> the EPS number does not represent "a =
true and=20
fair view" of the current <BR>situation<BR> of the firm. You can =
not pay=20
bills with EPS number, you only can pay<BR> for personel and =
material if=20
you generate enough cash flow to cover your <BR>costs<BR> and to =
reach a=20
profit margin and to take care of investments in you=20
business.<BR> <BR> A very good way to see quickly if the EPS =
Reporting is fair or not --><BR> <BR> Check if the Cash =
Flow is=20
above or at least equal to the EPS numbers <BR>reported.<BR> If =
it is=20
even below, than its always good to be really critical=20
...<BR> <BR> Cash Flow Price Ratio should be always below =
the PE=20
Ratio. A good sign is<BR> if the Cash Flow to Price Ratio is half =
the PE=20
Ratio (thats my rule of <BR>thumb).<BR> <BR> Even better, =
use free=20
cash flow (the money that is not needed even after <BR>investments =
charged),=20
<BR> but this is not provided by any service I know=20
...<BR> <BR> I always wondered, why the investment community =
does=20
not pay attention to <BR>the differences<BR> between both numbers =
(PE and=20
PCF Ratio).<BR> But as far I can tell, a low Price Cash flow =
Ratio, which=20
is well below the <BR>PE Ratio is<BR> very seldem taken into =
account by=20
the market and very seldem is used as <BR>"fuel" to<BR> price up =
the=20
stock price.<BR> <BR> So I only get really cautious if the =
PCF Ratio=20
is not below the PE Ratio.<BR> <BR> But with Enron, I gues, =
even=20
this would not have helped, due to the fact <BR>that they just=20
reported<BR> wrong numbers...<BR> <BR> See=20
you<BR> <BR> Andreas<BR> <BR> <BR> >=20
-----Ursprungliche Nachricht-----<BR> > Von: Dave Cameron=20
[SMTP:dfcameron@yahoo.com]<BR> > Gesendet am: Sunday, January =
20, 2002=20
1:07 AM<BR> > An: <A=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
<BR> >=20
Betreff: [CANSLIM] Arthur Andersen<BR> > <BR> > =
<BR> >=20
--- Tom Worley <<A=20
href=3D"mailto:stkguru@netside.net">stkguru@netside.net</A>>=20
wrote:<BR> > Tom writes:<BR> > <BR> > > Is =
it=20
coincidence that Arthur Andersen is Enron's consultant /<BR> > =
>=20
advisor / auditor, and was also doing some of the same for=20
Sunbeam?<BR> > > (some Sunbeam execs just settled a =
shareholder=20
class action lawsuit<BR> > > for $15 million so they can=20
concentrate on defending themselves<BR> > > against fraud =
charges=20
by the SEC). Sure, I'll pay you guys $15<BR> > > really big =
ones,=20
but, hey, I'm still not admitting I did anything<BR> > > =
wrong with=20
the company financial reports. Maybe we should be buying<BR> > =
>=20
shares in companies making shredders?? This is the third =
big<BR> >=20
> financial scandal in recent years involving Andersen, and=20
now<BR> > > leading to cries from Congress for governmental =
regulation of<BR> > > accounting firms. Great idea, let the =
politicians who rarely can<BR> > > balance a budget, and =
invented=20
the concept of off-book accounting,<BR> > > regulate the=20
accountants.<BR> > <BR> > This makes me wonder how =
"good" the=20
earnings figures we get really<BR> > are. It seems =
logical that=20
given the number of firms that Arthur<BR> > Andersen serves as =
the=20
accountants/auditors, there have to be more<BR> > out there =
that are=20
fraudulent - and someone is benefiting.<BR> > <BR> >=20
Furthermore, is it likely this behavior is unique to just=20
Andersen?<BR> > <BR> > I don't mean to sound like a =
conspiracy=20
type; but it does give me a<BR> > dose of cynicism that we =
have to be=20
even more diligent in our<BR> > research. Enron was =
rarely, if=20
ever, a CANSLIM stock, but the lesson<BR> > is valuable=20
nonetheless.<BR> > <BR> > I suspect the Enron =
situation could=20
change some legislation. There<BR> > are some big =
name=20
trustee types demanding an investigation. I =
blame<BR> >=20
Andersen more than Enron. Andersen is "supposed" to =
be=20
impartial;<BR> > hence the auditing =
requirements.<BR> > =20
>><BR><BR>-<BR>-To subscribe/unsubscribe, email "<A=20
=
href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>-In=
the=20
email body, write "subscribe canslim" or<BR>-"unsubscribe =
canslim". Do=20
not use quotes in your email.</BLOCKQUOTE></BODY></HTML>
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