07/31/2009 05:12 am ET Updated May 25, 2011

Sirius XM Sweetens Earnings Report To Obscure Losses

The economy is a mess, and profits are under extreme pressure. Now comes the furious corporate spin to cast ugly results in the best possible light. A growing number of companies are asking investors to focus on pro forma or adjusted earnings and overlook ordinary business expenses ranging from payroll costs to interest payments on debt and even rent for office space.

Investors have seen this before. During the 2001-02 recession, struggling companies sometimes acted as if certain costs didn't exist when tallying up earnings, perhaps most notably when Waste Management urged shareholders to ignore its cost of painting garbage trucks. Regulators cracked down, but with tough times back, so too are the numbers games.

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