Political and other careers have ended sharply on the 15th of March, ever since Julius Caesar ran into the assassin’s knife on that date in 44 BC.
This year in America, consequences for the Republicans and the republic in general will flow from the winner-take-all presidential party primaries in Ohio and Florida – and, sadly, perhaps blood as well, if the sorry spectacle at last week’s cancelled Trump rally in Chicago is replicated.
On the business front, eyes as well as ears will be lent to the promised release of twice-delayed fourth-quarter earnings by Valeant Pharmaceuticals – whose stock price is off by 75% since last summer, stabilized last week in the high 60s although without pre-opening news at this writing on Monday morning.
As addressed at length in today’s New York Times and Financial Times, among many others, the company faces a catalog of issues – its revenue recognition, accounting measures and cash flow, along with its basic pricing, business and management model and strategies.
I had written back on January 16 on the timing and effects of CEO Michael Pearson’s suddenly-developed illness and leave of absence – from which he is reportedly recovered enough to be back on the job, for the moment at least. And I was pleased to contribute to the FT’s discussion of Valeant’s use of adjusted earnings measures:
“Many companies argue that shareholders should focus on adjusted figures, which strip out one-off costs and non-cash accounting charges, to judge the performance of the underlying business.
“However these adjusted numbers require investors to place their faith in the company managers who make the adjustments.
“’When a company starts introducing other terms like ‘adjusted’ you have to ask the question adjusted for what and adjusted by whom,’ says Jim Peterson, accounting specialist and author of “Count Down: The Past, Present and Uncertain Future of the Big Four Accounting Firms”.
“In the case of Valeant the adjusted earnings have raised concerns because of how sharply they have differed from the picture presented when generally accepted accounting principles (GAAP) are used instead.
“While this is not necessarily a bad thing, it has led some analysts to argue that it is impossible to fully judge Valeant’s underlying profitability.
“’Once you’re away from GAAP metrics you can fiddle it any way you want. A bane of the users of financial statements is the tendency of companies to use their own metrics to present whatever picture they like,’ says Mr. Peterson.”
The Ides of March saw the knives drawn literally in the Roman Senate, as they will be figuratively for US Senators Ted Cruz and Mark Rubio tomorrow. Michael Pearson and his board at Valeant would be well advised to consult their auguries on what the day portends for them as well.
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And information on my book – “Count Down” -- kindly cited by the FT -- is available here.