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US SEC preparing to scrap quarterly reporting requirement

reuters.com

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Re: US SEC preparing to scrap quarterly reporting requirement

#461

Post by JumpCrisscross »

balderdash wrote: post #376
JumpCrisscross wrote: post #151

Earlier quoted context omitted.

> don’t see how less granularity in financials is a good thing Transaction costs. Preparing this transparency costs money and attention.

As i mentioned those cost are real for small public companies, and while potentially tens of millions a year for large ones its a rounding error for them (e.g. MSFT spent ~$80m/yr on Deloitte the past couple of years for audit work, let's assume it also cost MSFT another $80m/yr on internal support for an annual cost of $160m) that would 0.15% of their net income and meaningless number in relation to the liquidity pr…

> that would 0.15% of their net income and meaningless number in relation to the liquidity provided

It's still a distraction for leadership. While they're on a strategic pivot like the current one, quarterly reporting makes sense. If they're floating along on predictable cash flows like usual, semiannual reporting with an 8-K if something weird happens should still be fine.

Re: US SEC preparing to scrap quarterly reporting requirement

#462

Post by vannevar »

fc417fc802 wrote: post #396
vannevar wrote: post #389

Earlier quoted context omitted.

And if they actually constructed the deal that way, it would be fine. But by essentially creating a sham sale where they return the cash back to the customer in return for equity, Nvidia can book revenue and claim non-existent cash flow. The key is that the sale would not have happened without the corresponding equity deal. Nvidia had no discretion to use that cash any other way, so the "cash flow" in that case is il…

I don't see the issue. Goods valued at that amount changed hands. Why shouldn't bartering be booked as cash flow? The regulator is going to require you to value it for them regardless.

Wall Street places a value on sales, on the assumption that the sale means a customer had the money and the desire to buy the company's goods. In this case, OpenAI had the desire but not the money---Nvidia basically gave them the money to buy the product. So that "sale" should be devalued in the market. What if Nvidia paid more for the stock than the chips were worth? Now they're essentially paying people to buy their product and hiding the bribe in an equity deal by overvaluing the customer. The market sees the big growing sales number and buys Nvidia stock on the assumption that the growth is organic. It also sees Nvidia putting a big valuation on OpenAI, driving up that company's value at well. At some point, OpenAI ends up with more chips than it needs and Nvidia ends up holding a bunch of overvalued OpenAI stock instead of cash. And both stocks eventually crash as a result.

Does that clarify the situation?

Re: US SEC preparing to scrap quarterly reporting requirement

#463

Post by astura »

giancarlostoro wrote: post #383
mcoliver wrote: post #120

Simultaneously they are opening up 0DTE options on certain stocks starting with large market caps but don't be surprised when this expands. Currently this was limited to large etfs like SPX. They are also extending trading hours towards 24/7 and eventually 365. How they square increasing liquidity with delaying information is insane. I know there is a lot of manipulation to make quarterly numbers and the tax code is…

> if companies reported dollars in and dollars out live to shareholders at least we would have an idea of how the company is doing in a general sense. A former manager used to run his own company, it was a satellite internet company sometime in the 2000s, they were going into the negative, so they had a big TV in the office, showing everyday what was coming in, and how much they made vs how much they owed. They did i…

Reporting sales numbers to employees on a regular interval (along with goals) is extremely common in private companies. Especially when employee bonuses are linked to those sales/goals.

Re: US SEC preparing to scrap quarterly reporting requirement

#464

Post by fc417fc802 »

vannevar wrote: post #462
fc417fc802 wrote: post #396

Earlier quoted context omitted.

I don't see the issue. Goods valued at that amount changed hands. Why shouldn't bartering be booked as cash flow? The regulator is going to require you to value it for them regardless.

Wall Street places a value on sales, on the assumption that the sale means a customer had the money and the desire to buy the company's goods. In this case, OpenAI had the desire but not the money---Nvidia basically gave them the money to buy the product. So that "sale" should be devalued in the market. What if Nvidia paid more for the stock than the chips were worth? Now they're essentially paying people to buy thei…

Not really. Or rather I think we both agree and disagree. Dysfunction is always possible (that's why we have regulation) and if you want to make a case that what happened between OpenAI and Nvidia ought to be against the rules that could certainly make for an interesting discussion.

However it's not at all uncommon for large sales agreements to come with additional strings attached. On its face I don't see how this example is any different.

If my company wanted to barter with another company to exchange equity for infrastructure how would you expect that to be reported? Did this situation differ from that expectation?

> What if Nvidia paid more for the stock than the chips were worth?

I'm not sure. It's an interesting question. Were the unit prices (ie chip and stock quantities) made public?

Re: US SEC preparing to scrap quarterly reporting requirement

#465

Post by resters »

smeggysmeg wrote: post #347
resters wrote: post #188

ultimately supply and demand should result in less demand for the stock of companies that do not provide adequate transparency about results. Supporters of the idea would likely say: "But considering that stock price crashes result in government bailouts, why bother reporting bad news since it just panics everyone and necessitates a bailout that shouldn't have been necessary."

Rational market theory is dead. Markets are not rational and do not respond to situations in rational fashions like you suggest. People operate on hype, fear, and insider trading.

I think the law changes the article describes prove your point. Companies would have nothing to gain by this if investors were rational.

Re: US SEC preparing to scrap quarterly reporting requirement

#466

Post by rdtsc »

mock-possum wrote: post #402
rdtsc wrote: post #370

Earlier quoted context omitted.

Because of how performance targets are defined. If sales figures “fell” or didn’t grow at the expected rate it can be worse than having a few more points over next quarter.

Why do they define performance targets that way then? Are they making it hard on purpose for some reason?

Sure but in most instances the system won’t change. Someone will usually define some reporting time period and some metrics to look at and agree when a lower threshold is reached that things start to look bad or alternatively, really good and they get an extra bonus or something.

What would you suggest? It sounds like you have a better system in mind already?

Re: US SEC preparing to scrap quarterly reporting requirement

#467

Post by kahrl »

philipdavis wrote: post #270

When you wonder how much damage one person can do in 4 years...

It's not one person, it's an entire criminal organization that merged with the GOP. And it is not in the personal best interest of anyone with a modicum of power to do anything about it, so nothing will be done.

Re: US SEC preparing to scrap quarterly reporting requirement

#468

Post by vannevar »

fc417fc802 wrote: post #464
vannevar wrote: post #462

Earlier quoted context omitted.

Wall Street places a value on sales, on the assumption that the sale means a customer had the money and the desire to buy the company's goods. In this case, OpenAI had the desire but not the money---Nvidia basically gave them the money to buy the product. So that "sale" should be devalued in the market. What if Nvidia paid more for the stock than the chips were worth? Now they're essentially paying people to buy thei…

Not really. Or rather I think we both agree and disagree. Dysfunction is always possible (that's why we have regulation) and if you want to make a case that what happened between OpenAI and Nvidia ought to be against the rules that could certainly make for an interesting discussion. However it's not at all uncommon for large sales agreements to come with additional strings attached. On its face I don't see how this e…

>If my company wanted to barter with another company to exchange equity for infrastructure how would you expect that to be reported? Did this situation differ from that expectation?

As I mentioned, I would have no problem if that's what happened. But it isn't. Nvidia recorded the cash as ordinary income. They did NOT record the stock as income. Cash has a clear value; stock does not. You keep reducing the transaction to its effective outcome, which is not where the problem lies, as I outlined above.

Re: US SEC preparing to scrap quarterly reporting requirement

#469

Post by balderdash »

JumpCrisscross wrote: post #461
balderdash wrote: post #376

Earlier quoted context omitted.

As i mentioned those cost are real for small public companies, and while potentially tens of millions a year for large ones its a rounding error for them (e.g. MSFT spent ~$80m/yr on Deloitte the past couple of years for audit work, let's assume it also cost MSFT another $80m/yr on internal support for an annual cost of $160m) that would 0.15% of their net income and meaningless number in relation to the liquidity pr…

> that would 0.15% of their net income and meaningless number in relation to the liquidity provided It's still a distraction for leadership. While they're on a strategic pivot like the current one, quarterly reporting makes sense. If they're floating along on predictable cash flows like usual, semiannual reporting with an 8-K if something weird happens should still be fine.

Personally I'd look at this exercise as a core part of their job I don't see how reporting on the financial results of the company to its owners on a quarterly basis is a distraction. Is this a huge endeavor for the finance/legal/IR teams, yes. Does this impact the operations of the business, not a whole lot.

Re: US SEC preparing to scrap quarterly reporting requirement

#470

Post by runarberg »

refurb wrote: post #306
AngryData wrote: post #298

Earlier quoted context omitted.

I mean the average person already barely has any participation at all, and certainly doesn't benefit from it when their money gets dumped down the toilet because of some widespread financial scams and grifts that repeatedly happen over and over again.

62% of adult Americans own stock.

Not by choice. Stocks are pushed onto Americans (as well as Europeans, and most people in the West) via their pension funds, advanced savings accounts, and sometimes even their salaries (via options). If normal savings accounts in their local credit union would offer adequate interest rates (and if paying in stocks was outlawed by their unions) stock ownership would plummet. I would be surprised if it would even exceed 2%.
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