Re: [CANSLIM] Law Suits (was ACRT or MXT?)

From: Spencer48@aol.com
Subject: Re: [CANSLIM] Law Suits (was ACRT or MXT?)
Date: Mon, 27 May 2002 20:48:41 EDT

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Katherine:

     I can understand why earnings will need to be restated (because of the 
expenses or the need to put some expenses in a reserve-fund), but why would 
sales need to be restated (ie. the new expenses involved in the lawsuit might 
indeed affect the bottom line, but how would it affect how much was sold in 
the past [unless the lawsuit alleges the accounting firm was dishonest in 
displaying the sales revenue]).  Moreover, if the company restates its sales 
after the allegation and before the conviction, wouldn't that company just be 
admitting what was charged?

     Can you envision a situation where sales would have to be restated other 
than when the company's accounting firm portrayed sales more than it actually 
was?

jans


In a message dated 5/27/2002 7:05:14 PM Eastern Daylight Time, 
stkguru@bellsouth.net writes:

<< A class action lawsuit can drag on for years. At the least, it may cause a
 company to reserve funds for a settlement and legal expenses that could be
 better used to build the company. If the same officers are still in place,
 it can cause a loss of confidence in their present day business dealings.
 But in any case, it puts a negative on the stock. It may be able to overcome
 the negative and go up in price, but is still affected.
 
 If insiders were selling during the class action period, and undoubtedly
 some did, there may be another lawsuit alleging insider trading.
 
 Prior year earnings and sales figures may end up having to be restated, >>

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