Comment Re:In case you hadn't noticed.... (Score 4, Informative) 228
Ummmm... nope.
It was a true net operating profit helped largely (and readily admitted by Amazon) by a favorable swing in the euro exchange rate. They expected a pro-forma profit and delivered a bonus profit.
Do you actually know what a pro forma profit is and why people use it? GAAP accounting forces you to account for non-cash charges like the amortization of goodwill.
For example, Amazon bought PlanetAll in 1998 for $250MM. How much money left their bank account? $0. It was paid for in stock, how much stock did Amazon buy on the market and transfer to PlanetAll? $0. They issued new stock that was authorized (and which the market, if it prices based on perfect public info) should factor in to some extent. Now they have to amortize that cost over time. But it wasn't a real $$ cost. So if you're looking at the operating performance of the business and you're trying to decide whether you should invest based on on-going normal operations you shouldn't (debateable of course) look at non-cash charges. Thus you look at Pro-Forma Operating profit.
Oh, and yes, the currency swing is also excluded from pro-forma profitability because it is a non-recurring cost (gain)
It was a true net operating profit helped largely (and readily admitted by Amazon) by a favorable swing in the euro exchange rate. They expected a pro-forma profit and delivered a bonus profit.
Do you actually know what a pro forma profit is and why people use it? GAAP accounting forces you to account for non-cash charges like the amortization of goodwill.
For example, Amazon bought PlanetAll in 1998 for $250MM. How much money left their bank account? $0. It was paid for in stock, how much stock did Amazon buy on the market and transfer to PlanetAll? $0. They issued new stock that was authorized (and which the market, if it prices based on perfect public info) should factor in to some extent. Now they have to amortize that cost over time. But it wasn't a real $$ cost. So if you're looking at the operating performance of the business and you're trying to decide whether you should invest based on on-going normal operations you shouldn't (debateable of course) look at non-cash charges. Thus you look at Pro-Forma Operating profit.
Oh, and yes, the currency swing is also excluded from pro-forma profitability because it is a non-recurring cost (gain)
