Cooking the books?

Louis Proyect lnp3 at
Sun Sep 2 09:01:21 MDT 2001

NY Times, September 2, 2001

Little League Missed Signs Paulino Had Broken Rules Before

During this year's World Series, Little League officials had learned
from the organization's officials abroad that Rolando Paulino had a
history of using ineligible players on his teams and was even barred
from participating in Little League in Latin America, but that that
transgression was overlooked because of miscommunication, a Little
League spokesman said yesterday.

And as early as the mid-Atlantic tournament, which ended Aug. 14 in
Bristol, Conn., Little League officials had in their hands a
government document that proved pitcher Danny Almonte should have
been ineligible to play for the Rolando Paulino All-Stars last year,
the spokesman said. But again, that evidence was overlooked.


NY Times, September 2, 2001


Take Away the Window Dressing, and Who Will Buy?

With the global economy in a stall, corporate spending at a
standstill and layoffs threatening to subvert consumer spending, it
is no surprise that the United States stock market is feeling

But something else is weighing on stocks. That is the creeping
realization among investors that the momentous earnings reported by
many companies in recent years may have been digitally remastered to
include a lot of hype, embroidery and fluff.

This is significant. Investors coming around to this view will be
less inclined to trust forecasts that company executives make. Having
lost faith in a company's numbers, investors will be unable to place
a fair value on its stock. In the dark on valuations, many investors
will shun the shares.

An extreme reaction? Not at all. It is precisely the payback that
companies deserve for embellishing their earnings.

The quality of corporate earnings seemed a quaint concern when stocks
were racing. Now, reality in company earnings is crucial. But
separating reality from fantasy in corporate earnings is harder than
ever. Consider the gulf between estimates of second- quarter earnings
from First Call and Standard & Poor's. While First Call said
operating earnings among companies in the S.& P. 500 had fallen by 17
percent from the same period last year, S. & P. reckoned that the
decline at those companies was 33 percent in the quarter.

Louis Proyect, lnp3 at on 09/02/2001

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