Famed Short Seller Chanos Turns Attention To Live Nation, IBM, Block

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Renowned short-seller, Jim Chanos, who famously predicted the collapse of book-cooker Enron in 2001, looked skeptically to Live Nation, International Business Machines and Block to finalize its financial position at a potential cost to its owners. are keeping.

In recent years, companies have slapped the word “adjusted” before various financial metrics, allowing them to report their results in ways that can create misleading appearances of success.

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“This is something the SEC has let go of for too long,” Chanos told attendees at the first Forbes Iconoclast summit in New York. “People think they are buying a profitable business, while in many cases they are buying an unprofitable business.

Live Nation produces shows such as concerts and distributes tickets for events around the world. The company reported 100 million tickets and adjusted operating income of $480 million in the first half of the year. Chanos is skeptical of adjustments that remove some expenses — such as depreciating assets — from the equation. They argue that the large amount of expense which was ignored was legitimate and should have been included in the income of the company.

He shared an equally critical view on IBM’s revenue accounting, saying he is concerned that the company’s shares are trading at 15 times earnings.

Last year, IBM spun off its infrastructure services business into a separate company, Kindrill, which it combined with a mandatory contract that would temporarily increase the former parent’s revenue. This feat of financial engineering won’t last the company long and will need to be replaced, Chanos says. “It’s a melting ice cube.”

Chanos closed his session by putting a similarly skeptical attitude toward the fintech bloc (formerly Square), whose stock is down 66% year-over-year. “This is a company that is inherently unprofitable,” he says.

Credit: www.forbes.com /

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