And managers of companies that have generated only losses, like Twitter \u2014 and even those that are profitable \u2014 are happy to suggest metrics that they think are better suited for assessing their operations.<\/p>\n
Managements\u2019 recommended measures, typically not found in generally accepted accounting principles, have an uncanny way of burnishing a company\u2019s results. They do so by eliminating some pesky costs of doing business.<\/p>\n
As such, these benchmarks are also known as earnings without the bad stuff. They were central to the valuations that propelled Internet stocks skyward in the late 1990s. Then, the higher the market climbed, the kookier the metrics became. …<\/p>\n
Twitter\u2019s recent prospectus serves as an example. Its management suggests that investors not focus solely on its $134 million net loss for the first nine months of 2013, a figure calculated under generally accepted accounting principles. If you want to see the company\u2019s operating results \u201cthrough the eyes of management,\u201d the prospectus suggests, look at its \u201cnon-GAAP net loss\u201d of $44 million for the period.<\/p>\n
To get to that figure, Twitter backs out two large costs. Stock compensation for the first three quarters of 2013 is the biggest, at $79 million. Twitter also removes $11 million in costs associated with amortizing or reducing the value of intangible assets it acquired previously.<\/p>\n
There\u2019s nothing improper in Twitter\u2019s filing. But the idea that these items don\u2019t cost the company is nonsense, says Jack T. Ciesielski, an accounting expert at R.G. Associates in Baltimore and publisher of The Analyst\u2019s Accounting Observer.<\/em><\/p>\n \u201cWhen they back out stock-based compensation they\u2019re basically saying that management is working for free,\u201d Mr. Ciesielski said. \u201cAnd we know that\u2019s not the case.\u201d<\/p>\n Ditto for the intangibles, he said. \u201cWhen they acquired a company, they spent money for things like in-process research and development, contracts and customer lists,\u201d he added. \u201cTo back out those intangibles is bogus.\u201d<\/p>\n<\/div>\n For Gretchen’s entire piece, click here. <\/strong><\/a><\/p>\n The Barclays Indoor Tennis is in London.<\/strong><\/span> The final tonight is between Joko and Rafa. It’s on the Tennis Channel. I believe at 8 PM.<\/strong><\/span><\/p>\n Reverse Logic<\/strong> gems.<\/strong><\/span><\/p>\n + I handed the teller at my bank a withdrawal slip for $400.00 I said “May I have large bills, please”<\/p>\n She looked at me and said “I’m sorry sir, all the bills are the same size.”<\/p>\n + We recently had a new neighbor call the local township administrative office to request the removal of the DEER CROSSING sign on our road.<\/p>\n The reason: ‘Too many deer are being hit by cars out here!<\/p>\n ‘I don’t think this is a good place for them to be crossing anymore.’<\/p>\n + I was at the airport, checking in at the gate when an airport employee asked, ‘Has anyone put anything in your baggage without your knowledge?’<\/p>\n To which I replied, ‘If it was without my knowledge, how would I know?’<\/p>\n He smiled knowingly and nodded, ‘That’s why we ask.’<\/p>\n Just had a house full of Tea Party Minnesotans whinging (complaining in Australian) at how expensive Sydney is. And they are right.<\/p>\n The exchange rate is killing me.<\/p>\n GM have threatened the Government they will pull out if they don’t get a (bigger) subsidy. Ford has announced they are going from 2016.<\/p>\n And we may not even get any new mines or gas projects, because the set-up costs are too high.<\/p>\n His lodge is really nice. Worth a stay next time you’re\u00a0 in Sydney. Click here<\/a>.<\/strong><\/p>\n The Admiral Collingwood Lodge in Sydney, Australia:<\/p>\n![\"HarryNewton\"](\"https:\/\/www.technologyinvestor.com\/wp-content\/uploads\/2013\/11\/Nickwoodman.jpg\")
<\/a>
\nHarry Newton’s dearest friend in Sydney, Australia runs a classy hotel at which you should stay. It’s called the Admiral Collingwood Lodge. He emails,<\/p>\n