Yahoo Ditches Pro Forma Earnings

from the good-for-them dept

Yahoo’s latest earnings announcement had one very interesting twist. They’ve announced that they will no longer be using pro forma earnings announcements. We’ve spoken about why pro forma earnings are bad before (they’re basically a report showing what the companies earnings would have been if they hadn’t screwed up, or if some other “one time” event had not happened). While there certainly are some situations where pro forma earnings are a useful tool, most tech companies seem to use them to hide how badly they did, or to hide a huge mistake they made. I think Yahoo is making a smart move in saying they won’t use them any more. It (at least on the face of it) suggests that they’re trying to be more honest with investors. While the cynical among you probably believe there are other reasons for it, it could (hopefully) start a trend towards more honesty in financial reporting from the tech industry.

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