Barron’s (June 23 Issue)
“Non-GAAP numbers were to be used judiciously to explain extenuating or extraordinary circumstances, like a factory fire or the sale of a division.” Instead, they’ve become endemic. “For fiscal 2024, some 351 companies in the S&P 500 index, or 71%, reported either non-GAAP net income or non-GAAP earnings per share.” Of those, 89% of the adjustments made “their results look better” and the difference can be vast. “Intel had the biggest adjustment last year.” With “a GAAP loss of $19.2 billion” the chipmaker “categorized $18.6 billion as nonrecurring, so it reported a non-GAAP loss of $600 million.” And the sleight of hand can be performed year after year. For example, Oracle “has booked a restructuring charge every year for the past five years.” Especially in tech and healthcare, “non-GAAP numbers are now more accepted than the ‘generally accepted’ ones.”
Tags: Adjustments, Endemic, EPS, Extenuating, Extraordinary circumstances, Factory fire, Healthcare, Intel, Loss, Net income, Non-GAAP, Nonrecurring, Oracle, Restructuring, Results, S&P 500, Tech
Financial Times (September 2)
Expectations of tapering by the Federal Reserve have “increased market volatility. And, as in past episodes of Fed tightening, emerging markets are at the centre of the turmoil…. No matter how gradual the tapering of QE, abrupt adjustments will occur. It is in the nature of financial markets to overreact and overshoot.”
Tags: Adjustments, Emerging markets, Expectations, Fed, Financial markets, Overreact, Quantitative easing, Tapering, Tightening, Volatility
