It takes skill. Profit warnings from Intel, Apple, Dell and others resulting from Wall street analysts professing to being disappointed may well prove to be of lesser concern than implications that emerge from murky accounting practices under these headings. Pooling Pooling is an accounting practice that is used by some companies acquiring other companies or merging with them. It can be operated as a smokescreen, but it is at present legal to account for transactions in this way. The problem is that with pooling, investors are given less information in the accounts, and it is not possible to tell how much was invested in a transaction, nor to track its success or failure, so preventing meaningful comparisons of corporate performance.
Cisco is a major user of pooling, and is actively resisting moves to ban it.
Cross ownership and related back-scratching Cisco was also criticised in a recent WSJ article about related party transactions and the relationships it has with its customers and suppliers, either directly or through personal holdings by its executives. This is something that Microsoft is increasingly doing. There are several similarities between cross-ownership and Japanese keiretsu. The resulting quasi-cartels may gain some added stability, but too often the consumer suffers as a result of higher prices and reduced competition. Auditor independence is critical if there is to be any credibility in the accounts of a company.