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Michael Clark

Michael Clark
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  • Update: Alcoa Earnings Crush It Once Again Thanks To The US Dollar [View article]
    Maybe their gig is up. Maybe everyone knows how they are inflating earnings.
    Jan 15, 2015. 02:29 PM | Likes Like |Link to Comment
  • Update: Alcoa Earnings Crush It Once Again Thanks To The US Dollar [View article]
    Generally, a strong dollar hurts all US companies with strong operations overseas. This artlcle explains why:

    http://reut.rs/1ItKr91

    From that article:

    The effects have not been restricted to companies in the consumer space: IBM on Monday said it expected dollar appreciation to have a significant impact on its fourth quarter and 2015 results - one more negative element in a generally gloomy earnings report.

    And United Technologies Corp on Tuesday cited the stronger U.S. currency in cutting its full-year profit forecast for its Otis elevators division, which generates a large chunk of its business outside the country, by about $50 million.

    The U.S. dollar index, which measures the value of the greenback against a basket of currencies made up of United States' major trading partners, rose 7.74 percent in the third quarter.

    A one percentage point move in the dollar typically translates to a two percentage point impact on earnings, said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

    NEW ENVIRONMENT

    Corporations are having to adjust to a new environment after more than a decade of enjoying the benefits of a relatively weak dollar on their earnings, analysts said. That means investors can expect more changes to guidance going forward.
    Jan 13, 2015. 08:26 PM | Likes Like |Link to Comment
  • Update: Alcoa Earnings Crush It Once Again Thanks To The US Dollar [View article]
    I don't know the answer to that question. The corporations have been making the rules for a long time. And they have had the FED's ZIRP to help them cheat and steal down this home stretch, borrowing money at 0% interest and buying back their own shares to make it look like they were still making money from their primary business, when most aren't. Reducing shares outstanding gooses earnings, when earnings aren't growing. Also many companies are now 'financialized', making money off of carry-trade investments instead of sales. Things aren't what they seem.

    AA has anothr way of doing it apparently.
    Jan 13, 2015. 12:21 AM | 2 Likes Like |Link to Comment
  • Update: Alcoa Earnings Crush It Once Again Thanks To The US Dollar [View article]
    You're welcome, BigGuy.
    Jan 12, 2015. 08:40 PM | 1 Like Like |Link to Comment
  • Update: Alcoa Earnings Crush It Once Again Thanks To The US Dollar [View article]
    Here's ZeroHedge's take on AA, for another perspective:

    http://bit.ly/1KDFYCA

    Moments ago Alcoa did what it always does following the now traditional several weeks of guidedowns heading into the earnings release that until recently used to kick off the earnings season for the Dow Jones Industrial Average (at least until Alcoa was unceremoniously kicked out): it beat, and beat significantly, with Wall Street expecting $0.27 in Q4 EPS, Alcoa reported a whopping $0.33, a material beat to expectations.

    Terrific job, and yet regular readers know that while some companies boost their buybacks and other fudge their tax-rate to beat EPS, Alcoa is known for something different: parking as many costs as possible into the "one-time, non-recurring" category, and thus getting non-GAAP addback "benefits" for these.

    Sure enough, this is precisely what happened in Q4, when Alcoa recorded a whopping $388 million in "addbacks", which also happens to be the second largest addback to in the past 4 years.

    Putting this number in context: GAAP EPS: $159, which however is pre-addbacks, a tiny $0.11 per share. Net of addbacks, however, this number surges to $432 million after tax, or three times higher, $0.33 EPS!

    In other words, two-thirds of Alcoa's beat in the quarter was due to what management thought was another quarter of recurring "non-recurring", non-one time "one-time" charges.

    What about the full year? Well, GAAP EPS was a measly $268 million or $0.21 EPS. However, when one adds back a whopping $1.2 billion pretax in one-time charges, what does one get? Why net income of $1.1 billion, or $0.92 EPS. Non-GAAP that is. Because only for Alcoa is the difference between GAAP and Non-GAAP some 75%.
    Jan 12, 2015. 06:45 PM | 5 Likes Like |Link to Comment
  • Alcoa Kicks Off Earnings: Some Numbers That Don't Add Up [View article]
    Very good, Karl. Have corporations always been lying in their financial reports like they are today -- or are these 'special circumstances'?
    Oct 8, 2009. 12:42 PM | 5 Likes Like |Link to Comment
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