Go to Jeff Salisbury LWGate Home Page.From: "Tom Worley" <stkguru@netside.net>
Subject: Re: [CANSLIM] PSFT: More accounting shenanigans?
Date: Thu, 24 Jan 2002 16:39:36 -0500
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I agree, Katherine, and when I was an active broker, I always read the =
10Q and 10K reports, cover to cover (the management section was usually =
the most helpful, tho).
In my case, doing this on a part time basis, I rely on the data that DGO =
gives me, and expect them to have read the reports. In my 401K, I expect =
the fund managers, or someone on their staff, to have read those =
reports. And when I see on DGO that they have earnings forecasts from =
several analysts, I also expect those analysts to have read those =
reports, plus done a lot of other work, before publishing those =
forecasts.
I realize that DGO relies on outside vendors for a lot of their data, =
but then they have the right to expect those vendors to be doing the DD.
And if the fund managers or analysts are not doing at least this much, =
they should be fired.
Tom Worley
stkguru@netside.net
AIM: TexWorley
----- Original Message -----=20
From: Katherine Malm=20
To: canslim@lists.xmission.com=20
Sent: Tuesday, January 22, 2002 12:04 PM
Subject: Re: [CANSLIM] PSFT: More accounting shenanigans?
Hate to say it, but there's no substitution for a good read of the =
10Q's and 10K's in combination with a good review of past news stories. =
Any yellow flags in the news stories should warrant a deeper dive into =
the financials. Any "odd" comments or financial "oddities" in the =
financial statements can be noted and investigated. (I always head =
straight for the management discussion of results and the pending legal =
actions sections. Then look for odd accounting footnotes in the =
financials.) Can't catch them all, but without the due diligence, =
there's *no* chance of catching them. If a stock has too many yellow =
flags during DD, I just cross it off the list. There's plenty of fish in =
the sea. Despite all that, technical action usually speaks for these =
stocks long before the historical fundamentals "explain" the problems. =
Investors who don't combine technical/fundamental work miss the clues.
Katherine
----- Original Message -----=20
From: Tom Worley=20
To: canslim@lists.xmission.com=20
Sent: Tuesday, January 22, 2002 10:52 AM
Subject: Re: [CANSLIM] PSFT: More accounting shenanigans?
so, how can small investors detect, much less avoid, these kinds of =
slick tricks?
Tom Worley
stkguru@netside.net
AIM: TexWorley
----- Original Message -----=20
From: Katherine Malm=20
To: canslim@lists.xmission.com=20
Sent: Tuesday, January 22, 2002 11:45 AM
Subject: [CANSLIM] PSFT: More accounting shenanigans?
Once more into the fire. Think this will become the "year of the =
accounting case study."
--Katherine
This from Briefing.com
Archives In Play=AE all dates =20
Date (ET) Archive Article=20
Jan 22 2002
11:06 AM In Play PeopleSoft (PSFT) 33.45 -1.89 (-5.4%): -- =
Update -- This is not the first time that concerns about accounting at =
the Momentum unit have been brought to light. On Jan 2, Briefing.com =
reported a Lehman defense of the stk following a 12/31 Bloomberg article =
indicating that PSFT might repurchase its Momentum Business Applications =
unit to avoid paying royalties. Lehman predicted that PSFT was likely to =
purchase Momentum for about $90 mln within the next few qtrs. Firm did =
not think there were accounting irregularities and viewed the issue as =
likely overblown.=20
Jan 22 2002
10:53 AM In Play PeopleSoft (PSFT) 34.37 -0.97 (-2.7%): =
- --Update-- According to the San Jose Mercury article, PeopleSoft hired =
that subsidiary, Momentum Business Applications, to write new software, =
and Momentum, in turn, hired PeopleSoft programmers at a markup. The =
arrangement transformed the high cost of creating new programs into a =
source of revenue for PeopleSoft.=20
Jan 22 2002
10:49 AM In Play PeopleSoft (PSFT) 34.32 -1.02 (-2.9%): =
Accounting concerns again putting pressure on PSFT shares. The San Jose =
Mercury News reports that an accounting maneuver by former PSFT head =
allowed company to avoid crushing development costs. Six months before =
stepping aside, PSFT co-founder David A. Duffield transferred $250 =
million to a newly created subsidiary with just one employee and an =
office down the road from PeopleSoft headquarters. Peter Knutson, an =
associate professor emeritus of accounting at the University of =
Pennsylvania's Wharton School, believes the arrangement misled =
investors: 'It is within the boundaries of generally accepted accounting =
principles, but it is really an intent to deceive.'
=20
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<DIV><FONT face=3DArial>I agree, Katherine, and when I was an active =
broker, I=20
always read the 10Q and 10K reports, cover to cover (the management =
section was=20
usually the most helpful, tho).</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>In my case, doing this on a part time basis, I =
rely on the=20
data that DGO gives me, and expect them to have read the reports. In my =
401K, I=20
expect the fund managers, or someone on their staff, to have read those =
reports.=20
And when I see on DGO that they have earnings forecasts from several =
analysts, I=20
also expect those analysts to have read those reports, plus done a lot =
of other=20
work, before publishing those forecasts.</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>I realize that DGO relies on outside vendors for =
a lot of=20
their data, but then they have the right to expect those vendors to be =
doing the=20
DD.</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>And if the fund managers or analysts are not =
doing at=20
least this much, they should be fired.</FONT></DIV>
<DIV> </DIV>
<DIV>Tom Worley<BR><A=20
href=3D"mailto:stkguru@netside.net">stkguru@netside.net</A><BR>AIM:=20
TexWorley</DIV>
<BLOCKQUOTE dir=3Dltr=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=3Dkmalm@earthlink.net =
href=3D"mailto:kmalm@earthlink.net">Katherine=20
Malm</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> Tuesday, January 22, 2002 =
12:04=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] PSFT: =
More=20
accounting shenanigans?</DIV>
<DIV><BR></DIV>
<DIV>Hate to say it, but there's no substitution for a good read of =
the 10Q's=20
and 10K's in combination with a good review of past news stories. Any =
yellow=20
flags in the news stories should warrant a deeper dive into the =
financials.=20
Any "odd" comments or financial "oddities" in the financial statements =
can be=20
noted and investigated. (I always head straight for the management =
discussion=20
of results and the pending legal actions sections. Then =
look=20
for odd accounting footnotes in the financials.) Can't catch them =
all,=20
but without the due diligence, there's *no* chance of catching them. =
If a=20
stock has too many yellow flags during DD, I just cross it off the =
list.=20
There's plenty of fish in the sea. Despite all that, technical action =
usually=20
speaks for these stocks long before the historical fundamentals =
"explain" the=20
problems. Investors who don't combine technical/fundamental work miss =
the=20
clues.</DIV>
<DIV> </DIV>
<DIV>Katherine</DIV>
<BLOCKQUOTE dir=3Dltr=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=3Dstkguru@netside.net =
href=3D"mailto:stkguru@netside.net">Tom=20
Worley</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>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Tuesday, January 22, =
2002 10:52=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] PSFT: =
More=20
accounting shenanigans?</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial>so, how can small investors detect, much =
less avoid,=20
these kinds of slick tricks?</FONT></DIV>
<DIV> </DIV>
<DIV>Tom Worley<BR><A=20
href=3D"mailto:stkguru@netside.net">stkguru@netside.net</A><BR>AIM:=20
TexWorley</DIV>
<BLOCKQUOTE dir=3Dltr=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=3Dkmalm@earthlink.net =
href=3D"mailto:kmalm@earthlink.net">Katherine=20
Malm</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A=20
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Tuesday, January 22, =
2002 11:45=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [CANSLIM] PSFT: =
More=20
accounting shenanigans?</DIV>
<DIV><BR></DIV>
<DIV>Once more into the fire. Think this will become =
the "year of the=20
accounting case study."</DIV>
<DIV> </DIV>
<DIV>--Katherine</DIV>
<DIV> </DIV>
<DIV> This from Briefing.com</DIV>
<DIV> </DIV>
<DIV>
<TABLE cellSpacing=3D0 cellPadding=3D2 border=3D0>
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<TD class=3Dcat vAlign=3Dtop width=3D669><B>Archives </B>In=20
Play<SUP>=AE</SUP> all dates</TD>
<TD class=3Dcat vAlign=3Dtop align=3Dright width=3D78><A=20
href=3D"javascript:ToggleHeadline();"><IMG height=3D23=20
=
src=3D"http://www.briefing.com/images/briefing/show_headline.gif"=20
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<TD class=3DtdG noWrap width=3D"12%">Date (ET)</TD>
<TD class=3DtdG noWrap width=3D"10%">Archive</TD>
<TD class=3DtdG noWrap =
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<TD class=3Dtd4g vAlign=3Dtop noWrap width=3D"12%">Jan 22 =
2002<BR>11:06=20
AM</TD>
<TD class=3Dtd7g vAlign=3Dtop width=3D"10%" rowSpan=3D2><A =
class=3Dtd7g=20
=
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style=3D"BACKGROUND-COLOR: #eaf4f1" color=3D#000000>In=20
Play</FONT></A></TD>
<TD class=3Dr2 width=3D"78%" rowSpan=3D2>PeopleSoft (PSFT) =
33.45 -1.89=20
(-5.4%): -- Update -- This is not the first time that =
concerns about=20
accounting at the Momentum unit have been brought to light. =
On Jan=20
2, Briefing.com reported a Lehman defense of the stk =
following a=20
12/31 Bloomberg article indicating that PSFT might =
repurchase its=20
Momentum Business Applications unit to avoid paying =
royalties.=20
Lehman predicted that PSFT was likely to =
purchase=20
Momentum for about $90 mln within the next few qtrs. Firm =
did not=20
think there were accounting irregularities and =
viewed the=20
issue as likely overblown.</TD></TR></TBODY></TABLE>
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<TR>
<TD class=3Dtd4w vAlign=3Dtop noWrap width=3D"12%">Jan 22 =
2002<BR>10:53=20
AM</TD>
<TD class=3Dtd7w vAlign=3Dtop width=3D"10%"><A class=3Dtd7w=20
=
href=3D"http://www.briefing.com/scripts/ArchCal.asp?ID=3DIN"><FONT=20
color=3D#000000>In Play</FONT></A></TD>
<TD width=3D"78%">PeopleSoft (PSFT) 34.37 -0.97 (-2.7%):=20
--Update-- According to the San Jose Mercury article,=20
PeopleSoft hired that subsidiary, Momentum Business =
Applications, to=20
write new software, and Momentum, in turn, hired PeopleSoft=20
programmers at a markup. The arrangement transformed the =
high cost=20
of creating new programs into a source of revenue for=20
PeopleSoft.</TD></TR></TBODY></TABLE>
<TABLE cellSpacing=3D1 cellPadding=3D2 width=3D754 border=3D0>
<TBODY>
<TR>
<TD class=3Dtd4g vAlign=3Dtop noWrap width=3D"12%">Jan 22 =
2002<BR>10:49=20
AM</TD>
<TD class=3Dtd7g vAlign=3Dtop width=3D"10%" rowSpan=3D2><A =
class=3Dtd7g=20
=
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style=3D"BACKGROUND-COLOR: #eaf4f1" color=3D#000000>In=20
Play</FONT></A></TD>
<TD class=3Dr2 width=3D"78%" rowSpan=3D2>
<DIV>PeopleSoft (PSFT) 34.32 -1.02 (-2.9%): Accounting =
concerns=20
again putting pressure on PSFT shares. The San Jose Mercury =
News=20
reports that an accounting maneuver by former PSFT head =
allowed=20
company to avoid crushing development costs. Six months =
before=20
stepping aside, PSFT co-founder David A. Duffield =
transferred $250=20
million to a newly created subsidiary with just one employee =
and an=20
office down the road from PeopleSoft headquarters. Peter =
Knutson, an=20
associate professor emeritus of accounting at the University =
of=20
Pennsylvania's Wharton School, believes the arrangement =
misled=20
investors: 'It is within the boundaries of generally =
accepted=20
accounting principles, but it is really an intent to =
deceive.'</DIV>
<DIV> </DIV>
=
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