GAAP versus The Street: Two Cases of Conflicting Quarterly Earnings

I: Intel Corporation (Nasdaq: INTC)

On October 12, 1999, INTC announced results for the third fiscal quarter of 1999. A copy of the press release containing the announcement is attached as Exhibit 1. The analyst tracking services reported the following earnings surprise information for the quarter: Consensus Forecast of EPS of $0.57 and Actual EPS of $0.55

While each of the tracking services reported actual EPS at $0.55, INTC's fiscal 1999 third quarter Form 10-Q indicates that EPS for the quarter, computed according to GAAP, was $0.42.

Questions

1. How much did INTC's report as the third quarter EPS computed according to GAAP?

2. Identify the reason(s) for the difference between the actual EPS numbers reported by the analyst tracking services and the EPS number computed according to GAAP.

3. Which of the alternative EPS numbers do you think best represents the performance of the company for the quarter? Explain your answer.

II: eBay.com, Inc (Nasdaq: EBAY)

Go to www.ebay.com and find the investor relations link (it is under "About eBay"). Find the most recent press release announcing their quarterly financial results. You may also see a 10-Q or 10-K filing, but look for the press release that generally precedes this filing.

Questions

3. Read the press release and see if you can determine EBAY's GAAP EPS for the quarter.

4. See if you can determine the consensus "The Street's" EPS number for the same quarter from finance.yahoo.com.

5. Identify the reason(s) for the difference between the actual EPS numbers reported by the analyst tracking services and the EPS number computed according to GAAP.

6. Which of the alternative EPS numbers do you think best represents the performance of the company for the quarter? Explain your answer.

Attachment:- GAAP versus The Street.rar