Comments on: Comments on 19168

Post number 19168

Neale — Wed, 14 Aug 2002 17:37:29 -0800

Screw you worldcom, enron. In Australia we know how to make a loss. AU$11,962,000,000 in fact. One has to wonder how much of this is a "paper loss" or how much of this is "creative accounting for tax purposes". Or just where the hell did the money go?

By: bitdamaged

bitdamaged — Wed, 14 Aug 2002 17:40:35 -0800

This has nothing on the enron or worldcom scandal. (and what's that $11 U.S. ;) obvious troll

By: donkeyschlong

donkeyschlong — Wed, 14 Aug 2002 17:50:16 -0800

Yeah, seriously -- are Oz dollars even remotely comparable? No.

By: loukas_c

loukas_c — Wed, 14 Aug 2002 17:56:33 -0800

mid-market rates as of 2002.08.15 00:54:28 GMT. 11,962,000,000.00 AUD = 6,451,547,756.45 USD 1 AUD = 0.539337 USD 1 USD = 1.85413 AUD

By: insomnyuk

insomnyuk — Wed, 14 Aug 2002 18:01:50 -0800

That's pretty close to the Canadian exchange rate isn't it? Toy money, really. *ducks after brief trolling maneuver* Oh, and how the hell could News Corp just manage to 'lose' 6 billion dollars?( U.S.) Maybe spending all that money on makeup for Bill O'Reilly to cover up his liver spots?

By: Hildago

Hildago — Wed, 14 Aug 2002 18:04:30 -0800

Is this a matter of national pride to you folks? Doesn't matter if the aussie dollar is weaker than that of the U.S., unless you think it means it's only .54 times as important for Australian kids to go to college, or eat dinner, et cetera.

By: dg

dg — Wed, 14 Aug 2002 18:10:38 -0800

11,962,000,000.00 AUD = 6,451,658,054.98 USD. Just a drop in the bucket really :-) I would almost bet that this is some creative accounting for tax or other purposes. Rupert Murdoch is not known for allowing things to go any way other than his without some serious head-rolling as a result.

By: Neale

Neale — Wed, 14 Aug 2002 18:15:39 -0800

Doesn't matter if the aussie dollar is weaker than that of the U.S., unless you think it means it's only .54 times as important for Australian kids to go to college, or eat dinner, et cetera. Happily, the cost of living here is about half that of the states, so everything is proportionally equal. It does mean that people from the US who come here find themselves bizarrely well off, and Aussies who travel to the states find everything terribly expensive. But if you earn AU$50,000 in Oz, or US$50,000 in the USA, you're living pretty much the same lifestyle. In terms of that, AU$11b is a fucking HUGE loss to an Aussie company. Most of it seems to be writedowns for IT purchases and cornering several cable markets. Murdoch is a smart man - it'll pay off in the long run if the company can recover.

By: dg

dg — Wed, 14 Aug 2002 18:17:54 -0800

We do fine with our dollar, thank you Hildago. Working in an industry exporting from Australia, I am glad to see the exchange rate stay the way it is, because that makes us more competitive against our US and UK competitors. On preview - what Neale said.

By: dash_slot-

dash_slot- — Wed, 14 Aug 2002 18:41:28 -0800

Considering that the relative sizes of the national economies (I know, NewsCorp is operating multi-nationally, but so does every US megacorp), with the US at $9.963 trillion (2000 est.) and the Aussies at $445.8 billion (2000 est.) purchasing power parity, thats a ratio of 1:22 approximately, so multiply the US$6.45b (equivalent compared by dg) by 22 gets ya $140b.
dg 's assessment is otherwise on the money, imho.
If I was Rupie, this bit would worry me most tho..."News Corp's Filmed Entertainment division reported an operating income of $904 million for the year, compared with $487 in the prior corresponding period.!" Oops! (",)

By: dhartung

dhartung — Wed, 14 Aug 2002 18:54:25 -0800

Corporate write-downs showing losses are, in fact, what the Enron and Worldcom books-juggling were supposed to hide. Write-downs such as these are basically acknowledgements that a subsidiary will not produce future earnings as they had predicted. It may be a blow to the company's stock, even to an entire sector etc., but it isn't a stock scandal per se, unless there's evidence that the expected earnings were somehow inflated.

By: sennoma

sennoma — Wed, 14 Aug 2002 19:26:16 -0800

My first thought on hearing this was that it was an attempt to cover up years of Enron-style "creative accounting" by declaring losses sufficient to bring the company value back down to something realistic enough to survive an audit.V

By: Kevs

Kevs — Thu, 15 Aug 2002 00:31:03 -0800

dash_slot: Now I'm no economist (just a lowly management student), but as far as I know, Purchasing Power Parity compares the relative costs of goods in 2 areas. For instance, if it costs $2US to buy a banana here and the equivalent of $1US to buy a banana in Australia, they would have a 2:1 purchasing power ratio. The relative sizes of the national economy do not matter. That's why in Mexico, 10 grand a year can let you live middle class, since Polos sell for $5 and Cokes for $.50. (of course, this is simplistic; I think true PPP indexes look at CPI's in the various countries, not single items).

By: wackybrit

wackybrit — Thu, 15 Aug 2002 00:56:28 -0800

Yeah, seriously -- are Oz dollars even remotely comparable? No. Yeah, just like the US dollar is totally crappy compared to the British pound. UK £0.63 = US $1 If only economics were that simple though.. In terms of that, AU$11b is a fucking HUGE loss to an Aussie company. Maybe, but it's not as if News Corp. operates entirely for an Australian audience or only contributes to the Australian economy. In fact, I'd say News Corp. has a far bigger stature in the UK than Oz, with it owning several of the big dailies, scores of TV channels.. and even the whole of the country's only solvent digital TV system.

By: ToothpickVic

ToothpickVic — Thu, 15 Aug 2002 02:14:02 -0800

I blame Piers Morgan.

By: Foosnark

Foosnark — Thu, 15 Aug 2002 07:30:13 -0800

Maybe they should check under the sofa cushions?

By: dg

dg — Thu, 15 Aug 2002 16:31:01 -0800

If more proof was needed of peoples' confidence in the business acumen of Rupert Murdoch, Newscorp's shares rose 3% immediately following the announcement of record losses. Murdoch could front on TV and tell everyone that things were looking grim for Newscorp and he would be surprised if they were still trading in a week and the reaction would be "crafty old bugger, he's up to something, better go and buy some more of his shares". CEOs of corporations whose stock stumbles every time someone give a mere hint of a guess of problems must be green with envy.

By: jaek

jaek — Thu, 15 Aug 2002 21:27:55 -0800

Kevs - almost. There are (at least) two ways to compare the value of currency. One is via exchange rate: if you can go to people who trade money and get $2AUS for $1US, the American dollar is worth twice as much. The other is via purchasing power parity: if you can buy a banana for $1US in America and $1AUS in Australia, then the two dollars are equivalent. The Economist actually has something called The Big Mac Index which illustrates the concept very well.