|Quoting speedbored (Reply 36):|
Would shareholders be better off right now if things had been done differently? Yes, of course. But the fact is that Boeing screwed it up, the money has been spent, and it can't now be unspent. No point crying over spilt milk. Better to concentrate on making the most of what happens from here on in.
I wonder if you realize the difference between spending money and accounting for it. The essence of this discussion is not about what Boeing has done, but about what it must still do in the future.
Specifically, Boeing has not accounted for the kabillions of dollars it has spent or for which it is obligated to spend for production costs. The distinction between flowing the cash, and recognizing the cash flows, are wholly separate activities. One of them has already occurred or will occur soon (flowing the cash); the other has yet to occur (accounting).
Worrying about how Boeing is going to handle the accounting can not be crying over spilled milk because that milk is still in the container, and it must be poured at some point. Given the enormity of the money involved, this is a legitimate concern for Boeing and its shareholders.
We should all be aware that Boeing...
... has spent billions of dollars for which it has not yet accounted.
... must at some point account for this money by showing it as expense on the P&L.
To be Dickensian about this, The Ghosts of Accounting Past have had a grand run due to program accounting. Each quarter's Ghost of Accounting Present hopes that his quarter is not the one in which Boeing decides to take a $10 billion hit to right the balance sheet with short-term bad news. And the Ghosts of Accounting Future face a grim future since their earnings have already been claimed by their forebears.
Boeing might be doubling down by increasing deferred production costs. They believe they can make it up by greater-than-expected production efficiencies. If they can, then the Ghosts of Accounting Future may still resent what was taken from them, but they can still be merry. If not, then you can be assured that a few quarters of negative earnings in the *billions* of dollars will have a destructive effect on the stock price, even if it improves the balance sheet and does no harm to Boeing's cash position.
[Edited 2015-10-19 14:33:20]
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