Qwest to Restate Earnings


  Not too much of a surprise.


there are no IOS commands in this posting. hit "D" now.


  Not too much of a surprise.

you mean the part where it says...

  Qwest bought telephonic capacity on another company's system and
        booked it as a capital expense, which is only recorded slowly over
        several years, while selling the same amount of capacity to the
        other firm, and booking that immediately as revenue.

...or was there something else which ought to have apalled you and didn't?

completely by accident, but to my great good fortune, i heard


in real time and i've got to say that harvey pitt sounds like the man
for this moment. quoting his speech:

  ... corporate officers and directors, and especially the CEOs and
        CFOs, must personally assume responsibility for compliance with our
        full disclosure laws. The ouster of unfit officers and directors is
        a critical tool to ensure that officers and directors "get it,"
        that their mission is to safeguard the interests of
        shareholders. It is also important to prevent any corporate
        wrongdoers from getting a second chance to injure investors.


  And, speaking of WorldCom, we heeded the lessons of Enron by taking
  WorldCom to federal court on financial fraud charges, and seeking
  the appointment of a corporate monitor - former SEC Chairman
  Richard Breeden - to ensure that no WorldCom records would be
  destroyed, and no WorldCom assets would be dissipated by
  extraordinary payments to present or former officers, directors or
  employees. The filing of that action so quickly, and the obtaining
  of effective interim relief so rapidly, is a tribute to our
  crackerjack trial unit in the Enforcement Division.


  I am attaching to this speech, which should now be available on the
        SEC's Web page, a summary of nearly two-dozen major achievements by
        the Commission over the past 11 months, including accelerated
        filing of periodic reports, amendments to enhance investors'
        understanding of companies' critical accounting principles, and a
        required CEO/CFO certification of companies' quarterly and annual

that recertification thing is going to cause any number of public companies
to restate, especially in cases where the CEO and CFO have been replaced,
since oddball bookkeeping tricks are finally getting the scrutiny they so
richly deserve, and new executive teams are NOT willing to do jail time on
behalf of prior executive teams. (securities law used to allow this kind
of responsibility-laundering, but those days, thankfully, are now gone.)

and then there's http://www.sec.gov/news/speech/spch578.htm, wherein pitt says:

  Our next matter is a recommendation by the Staff of the Division of
        Market Regulation that the Commission propose a rule that would
        require analysts to certify that research reports they issue
        represent their actual views and to provide disclosures as to
        whether they have received compensation for the opinions expressed
        in those reports. ...

that's going to put most of the analysts i've watched completely out of
business. somebody finally asked "how is it that these analysts all own
expensive cars and real estate" and the answers were apparently non-pretty.

(disclaimer: i've got nothing against Q or WCOM per se.)

My wife used to work at the SEC. Her opinion on this subject is that Harvey is a day late and a dollar short.

  Arthur Levitt wanted to have a stronger separation between the consulting & accounting arms of firms like Arthur Anderson, but Congress killed it -- Enron managed to contribute enough to the various re-election funds of various politicians that it didn't stand a chance.

  Maybe if they had listened to Arthur, Enron would have been caught earlier, and maybe not have been so bad. Maybe WorldCom wouldn't have happened at all. Maybe Qwest might have been caught earlier. Maybe they might have turned up something more on Microsoft and been able to really slap them down, as opposed to just applying some perfume to their wrists.

Yea, dont you hate it when companies understate their earnings.