Apple Inc (AAPL)

[roni]

The bubble lives on: quality of earnings S&P 500

http://www.nytimes.com/2003/07/13/business/yourmoney/13WATC.html

Taken together, earnings at many companies are not what many investors think they are, Mr. Bianco said. As a result, these company shares sport a higher cost, in the form of a price-earnings ratio, than investors believe.

He analyzed results at each of the S.& P. 500 companies over the last 11 years, viewing earnings and accounting practices over an entire economic cycle. Then, he adjusted the companies' reported earnings for special charges, stock-option grants and overly rosy pension assumptions. What he found was that in 1991, the adjusted earnings were roughly 18 percent less than those the companies reported to shareholders: $15.91 a share versus $19.50 a share.

Shifting to 2002, the difference grows vast: earnings adjusted for the funny stuff were 41 percent less than the profits reported to investors.

The article goes on to highlight the specifics of companies such as Texas Instruments and eBay.

Ron