Replies to post #157 on General Magic (fka GMGC)

[v-man]

Fred --

I don't need JohnM to remind me . . .
My wife reminds me nearly every day, much to my chagrin!!

Good thing I'm so handsome and humble, or she woulda left me a long time ago for a smarter, richer man!!

But seriously, JohnM has a great feel for companies and the markets, and his past prognostications have been better than most . . . it would be prudent to seriously consider his perspectives. And I'll be the first (well, probably not the first) to admit that things don't look good right now.

But while there's still life, there's still hope. In GMGC's case, they may yet be able to pull an ace out of the hole, e.g., an actual contract with IBM, GE, C and/or someone else that puts some real $$$$$ into their pocket . . . but it better happen pretty soon. If so, the stock's upside from the current price should be very rewarding. If not, well, my income will be at least partially tax-sheltered for decades to come.

Since I'm still long, I'm obviously betting that they make it. If not, my wife may single-handedly alter the male life-expectancy tables toward the downside.

v

[v-man]

OT: Fred --

If you have 30 minutes or so to spare and you're one of those investors who believe that earnings actually have something to do with stock prices (weren't too many of us two years ago, but the ranks are growing more recently!), you might wanna go poke around at this site:

http://www.standardandpoors.com/PressRoom/index.html

Especially look at "Standard & Poor's To Change System For Evaluating Corporate Earnings" (under "HOT TOPICS") and "Corporate Earnings Documentation" where "Measures of Corporate Earnings" details S&P's methodology and where the earnings of Cisco, GE and Tricon Global are reviewed, showing the difference between these companies' various types of reported earnings and the "core" earnings as defined by S&P . . . it's very interesting.

The bottom line is that S&P will soon be reporting the "core" earnings for companies and for indices, which among other things includes the expense of stock options that the majority of companies are not now including in their reported earnings. (S&P points out that only 2 companies in the S&P 500 Index currently include employee stock-option grants as an expense item in their income statements . . . if stock options were included as an expense, it would have lowered the earnings of the companies in the S&P 500 by 10%, on average, last year.)

Here are a few snippets to whet your appetite:

"For over 140 years, Standard & Poor's has stood for the investor's right to know. Central to that objective is a clear, consistent, definition of a company's financial position," said Leo O'Neill, president of Standard & Poor's. "The increased use of so-called pro forma earnings and other measures to report corporate performance has generated controversy and confusion and has not served investor interests. Standard & Poor's Core Earnings definition will help build consensus and restore investor trust and confidence in the data used to make investment decisions."

"A number of recent high profile bankruptcies have renewed investors' concerns about the reliability of corporate reporting," said David M. Blitzer, Standard & Poor's chief investment strategist. "From the work we have just completed, our hope is to generate additional public discussion on earnings measures. Once there are more generally accepted definitions, it will be much easier for analysts and investors to evaluate varying investment opinions and recommendations and form their own views of which companies are the most attractive."

Beginning shortly, Standard & Poor's will include the components of its definition for Core Earnings in its COMPUSTAT database for the U.S., the leading source for corporate financial data. In addition, Core Earnings will be calculated and reported for Standard & Poor's U.S. equity indices, including the S&P 500. Finally, Standard & Poor's own equity research team, which provides opinions on over 1100 stocks, will adopt Core Earnings in its analyses.

Just something more to ponder re the overall investment equation . . .

:-)
v