CNET News.com: SEC pores over pro formaJun 21, 2001, 17:00 (30 Talkback[s])
(Other stories by Margaret Kane)
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CNET reports that the US Securities and Exchange Commission is investigating companies for deception thanks to their use of pro forma financial results. As an example of the dramatic difference between pro forma and the results showing using the Generally Accepted Accounting Principals (GAAP) standard, this article points at Red Hat, which either had a $600,000 profit or a net loss of $27.6 million this past quarter... the company's first profitable quarter ever, according to the press releases. Please note, so there's no ambiguity at all, that this article does not say that Red Hat's under investigation.
"There are other reasons behind the popularity of pro forma numbers. For one, companies want to stay in line with what their competitors are doing.
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