From Zero Hedge, 1/8/15:
There is a reason why, when looking at S&P 500 earnings, we only care about GAAP numbers: the reason is that any non-GAAP “data” has become as meaningless as “adjusted EBITDA” – a goalseeked, procyclical placeholder which gives zero indication of the true financial state of the company and is merely a propaganda tool used by management and its preferred investment bank to raise capital or its stock price (and hence, equity-linked executive compensation) to naive investors…
…Well, we are delighted that finally others too are starting to look at the real gimmicks used and abused by corporations everywhere to “report” better than expected numbers. Enter the WSJ, which came, saw at Non-GAAP “numbers”, and was horrified to find the costs companies are “stripping out of those measures to enable themselves to show profits seem to be getting ever more eyebrow-raising.”
For anyone who spends any time examining financial statements, or reading Zero Hedge, this is not news. However, as is so often the case, the mainstream media has now blessed a “truth” long ago uncovered and discussed on non-mainstream web sites. The simple truth here, for those eleven people who still do fundamental analysis of companies’ financials, is that reported numbers, especially those which are some company-designed metric, have to be taken with a shaker of salt. But never mind that, what’s the Fed going to do next?
For the rest of the Zero Hedge article: http://www.zerohedge.com/news/2015-01-08/wsj-looks-non-gaap-earnings-horrified-what-it-finds