Tuesday, January 20, 2009

State Street's "earnings"--more lipstick on a pig

State Street discloses $5.5 billion of unrealized losses after the market close on Friday, and then it today's earnings release, State Street calls these losses "previously disclosed." A breakdown of that loss, and my spin is here:
Here's the WSJ version of it.

A breakdown of State Street's earnings release this morning is here with their press release:
Operating-basis” results for the full-year 2008 exclude previously reported net effects of $(28) million, or $(0.25) per share, as well as fourth-quarter net effects of $(723) million, or $(1.03) per share, including $(450) million related to the previously disclosed transaction with certain stable value funds managed by State Street Global Advisors; restructuring charges of $(306) million, primarily associated with our previously announced reduction in force; merger and integration costs of $(27) million associated with the 2007 acquisition of Investors Financial Services Corp. (“Investors Financial”); partially offset by net interest revenue of $60 million from acting as an intermediary under the Federal Reserve Bank’s Asset-Backed Commercial Paper Money Market Liquidity Facility (“AMLF”).

So if you want to buy State Street on their so called "earnings beat" then what you really are buying is just accounting gimmicky.

It's just lipstick on a pig.

But it's the Fed's lipstick! It was the $60 million from the AMLF!

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