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From the trenches:
: So, here's the
Securities and Exchange Commission
, finally doing what it should've done a long time ago by going after overzealous takeover-related charges, and how are the companies reacting? They're whining that the stock cops are too tough. A story in this morning's editions of
The Wall Street Journal
reported on widespread bellyaching in corporate America that the SEC has gone too far in its quest to wipe out so-called cookie jar (managed) earnings. Companies are claiming it's "unfair" to be nabbed for something they've already done, and that any new crackdown should apply to the next guy. One exec claimed the SEC was "throwing their weight around." Sounds an awful lot like an
item here several weeks ago that reported how a software trade group was urging the SEC to yank its new get-tough policy because the rules could "have a major impact" on hundreds of companies.
Can ya believe the gall?! Reality -- and every CFO knows this -- is that in the rush to get deals done, companies have been overestimating charges. Go back and reread this column's interview last March with the CFO of
, the first company to be publicly nabbed, in a headline-grabbing way, for getting overly ambitious with its charges related to its takeover of
. He conceded that 3Com's charges were made on assumptions that couldn't be substantiated under the pressure of getting the deal done.
At the time, Robert Bayless, the chief accountant of the SEC's department of corporate finance, was quoted here as saying that the agency was worried about a number of abuses, including expenses that are written off before they occur, the timely recognition of excess inventory and uncollectable receivables.
"What's an acceptable merger charge?" I asked him. "Like beauty," Bayless replied, "it's in the eyes of the beholder. We have seen merger-related charges that may literally be the legal consequences of the merger, such as commissions paid to underwriters. But then they start putting in things they envision the future company to be. So every cost to accomplish this combined company, even if they're expected to occur in the future, becomes a merger-related cost. But they're not all costs that can be recognized under GAAP."
Most companies, apparently believing the SEC was too weak, chose to snub the warning. Now their investors will pay the price.
: Last week JJC made some offhand
comment about how much money guys are making betting against Piper Jaffray's
, who has been sounding an alarm about weakening sales growth for PC makers. This morning he's out with another warning on
slowing top-line growth. The company doesn't report earnings until Feb. 16. While most of Wall Street is likely to focus on year-over-year growth, Kumar will be shining the spotlight on sequential growth, the appropriate measure of a growth company. He estimates Dell's sequential growth for the quarter ended Jan. 31 was a sluggish 11%, which would trail competitors' growth rates. What's more, according to his comparisons, Dell's market share is dropping.
As for Wall Street making money by betting against him, you can hear Kumar's shrug over the phone when he says, "These aren't numbers I'm making up." Put another way, Wall Street doesn't want to let the facts get in the way of a good stock.
: This column's
morning dispatch included an update of my experience with
. I mentioned the company has had use of my money for a month. However, my wife, who handles our family's checkbook, tells me Shopping.com didn't show up on the December statement -- so I have no idea whether they've charged me yet. Let's hope they haven't, for their sake: Federal rules ban charging for products until they're shipped.
Herb Greenberg writes daily for TheStreet.com. In keeping with the editorial policy of TSC, he does not own or short individual stocks. He also does not invest in hedge funds or any other private investment partnerships. He welcomes your feedback at email@example.com. Greenberg writes a monthly column for Fortune and provides daily commentary for CNBC.