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why the capitalist economy will collapse. - Geoffrey Spear [entries|archive|friends|userinfo]
Geoffrey Spear

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why the capitalist economy will collapse. [Jul. 17th, 2002|04:23 pm]
Geoffrey Spear
3 big tech companies announced their quarterly earnings last night.

Apple met analysts' expectations. Their stock price dropped 12.5%.

Intel, which has a PE ratio and a price/book value ratio twice that of Apple's, missed expecations, and announced massive layoffs. They also lied to investors and said they expect to be profitable in the future. Their stock went up 5.88%.

Motorola annouced that it lost over 2 billion dollars. They didn't announce any new layoffs, as they just has massive layoffs earlier this month. They also claimed they expect to be profitable in the next quarter. Their P/E ratio is nonexistant, as they have no earnings. Their stock went up 4.27%.

The lesson is that even after Enron and WorldCom, people will continue to reward the companies that do poorly but pretend everything is ok, and punish the ones that run their business well. God bless America

[User Picture]From: wuttd
2002-07-17 02:02 pm (UTC)
Actually, I think a big part of it is that people can't know the truth. We depend on auditors like Arthur Andersen to tell us what the deal is with a particular company, but the auditors are on the payrolls of the companies.

My idea is to have the individual shareholders be the ones that pay the auditors through something like a tax of every share. A big problem is that the attitude is "if the company is being questionable, I can just dump the stock." Which screws people with non=tradable stock in their retirement plans.
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